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Explain crowding out and why it may be considered important for policy makers.
Crowding out refers to how enhanced government borrowing (real borrowing!) might serve to raise interest rates and basically makes scarce resources which could be used by firms. Basically, government borrowing crowds out an amount of confidential investment. There is also a monetarist/classical and Keynesian distinction herein, where the former view a high probability of (complete) crowding out and the latter view the effects as limited.
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