Summary AQA A-level Economics: Crowding in and Out Effect (Fiscal Policy) Notes
5 views 0 purchase
Course
The national and international economy
Institution
AQA
Key Summary Notes for the AQA A-level Economics course on the Crowding in and out effect, part of the Fiscal Policy topic, guaranteed to boost you to the top grades.
Crowding Out Effect: Economic theory arguing that rising public sector
spending drives down/eliminates private sector spending.
(assume economy is operating at full employment level)
- Classical Economist Idea
Crowding Out Opportunity Cost:
Crowding a good or service that a private sector could have offered.
Private sector could have offered service at:
- Better price
- More efficient due to profit motive
- Better quality
FOP employed by the government cannot be employed by the private
sector - could those workers be more effective in the private sectors.
Gov borrowing
Drawing Crowding Out Effect (PPF):
Axis: Gov spending vs Private sector spending
, Is there an opportunity cost of who would be better at employing FOP
Crowding Out Effect and Loanable Funds:
If Gov funds spending via taxation - greater marginal propensity to
withdraw from households and firms due to more disposable income/profits
going to government.
If gov funds by borrowing - How does gov source finance?
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller hamzakrashid. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.91. You're not tied to anything after your purchase.