If the government spends more on national defense and as a result, Marcy spends less on the construction of a new house, this is an example of

Question

Quizplus · Accepted Answer

Crowding out occurs when government spending increases, leading to higher interest rates or using up available financial resources, which in turn reduces private investment. In this case, Marcy's reduced spending on a new house due to increased government spending on national defense is an example of crowding out.

If the Government Spends More on National Defense and as a Result