Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R).
Assertion (A): Deficit spending by the government leads to a crowding out effect on private investment.
Reason (R): When the government finances its deficit by borrowing from the market, the bond prices go up and the rate of interest falls.
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Fiscal and monetary policy effectiveness has come up 30 times in 7 exams since 2010.
This question is on Relative effectiveness of fiscal and monetary policy, part of Fiscal and monetary policy effectiveness in Macroeconomics.
When each policy works best and how they interact.
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Question from the UGC-NET 2025 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.