The correct answer is C) The government issues treasury bonds and spends the revenue on a new highway system.
The statement that best describes a stage in the crowding-out effect is The government issues treasury bonds and spends the revenue on a new highway system.
The economic term "the crowding-out effect" can be understood as the moment when private investment spending is reduced due to a rise in interest rates. What could have a happened was that the government decided to develop the spending in an expansionary fiscal policy determination to promote the economy of a region. The result is an elevation of interest rates. That is why the best example could be when the government issues treasury bonds and spends the revenue on a new highway system.
