When private expenditures decrease as a result of increased government spending,it is known as

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The described scenario where private expenditures decrease due to increased government spending is known as the crowding out effect. This occurs because the increased government spending leads to higher interest rates, thus reducing private investment and consumption. The stabilizer effect refers to the automatic stabilizing effect of government spending during economic fluctuations. The multiplier effect describes how an initial increase in spending can have a larger impact on the overall economy through successive rounds of spending. Government deficit spending refers to the situation where government spending exceeds government revenues, leading to a budget deficit.

When Private Expenditures Decrease as a Result of Increased Government