The tendency for higher government budget deficits to decrease investment is called the

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The crowding-out effect refers to the situation where increased government borrowing leads to higher interest rates, which in turn reduces private investment. When the government borrows more, it competes with the private sector for available funds in the financial markets, leading to higher interest rates and making it more expensive for businesses to borrow and invest.

The Tendency for Higher Government Budget Deficits to Decrease Investment