Which of the following best describes the process of 'financial crowding out'?
An increase in private investment leads to a contraction in government tax revenues.
Increased government borrowing drives up interest rates, reducing private sector investment.
A rise in structural unemployment caused by capital-intensive production methods replacing labor.
The central bank purchasing government bonds in order to lower market interest rates.
68 exam-style questions on OCR A Level Economics Fiscal policy. Each one has a worked solution and a mark scheme showing where the marks go.