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Government Debt and Environmental Sustainability
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In the context of government debt, what is the term 'crowding out' commonly used to describe?
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A
The diversion of private investment towards government borrowing
💡 Explanation:
Crowding out occurs when government borrowing leads to higher interest rates, making it more expensive for private businesses and individuals to borrow money. This can divert investment away from productive activities and towards government debt, potentially slowing economic growth.