Reductions in private spending as a result of increased government spending or the need to finance a budget deficit is called
A) pushing in.
B) rushing forth.
C) crowding in.
D) crowding out.

Question

Quizplus · Accepted Answer

Crowding out refers to the idea that increased government spending or budget deficits lead to a decrease in private spending, as resources and funds are diverted away from private investment and consumption towards public sector activities. This reduction in private spending can also result in higher interest rates, which can further discourage private investment and economic growth.

Reductions in Private Spending as a Result of Increased Government