Decreases in consumption, investment, or net exports caused by an increase in government purchases are known as

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Quizplus · Accepted Answer

Crowding out refers to the decrease in private spending (consumption, investment, or net exports) caused by an increase in government spending. This decrease occurs because the government is competing with the private sector for resources (such as labor and capital) and therefore driving up the cost of those resources, making it more difficult for the private sector to afford them.

Decreases in Consumption, Investment, or Net Exports Caused by an Increase