Reductions in private spending as a result of increased government spending or borrowing is called

Question

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Crowding out occurs when an increase in government spending or borrowing leads to a decrease in private spending as resources are diverted towards government projects, resulting in higher interest rates and reduced investment by businesses and individuals. This can lead to a decrease in overall economic activity as private sector activity is crowded out by government spending.

Reductions in Private Spending as a Result of Increased Government