_____ occur(s) when government spending results in persistent deficits that necessitate borrowing, leading to a reduction in private investment.

Question

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Crowding out occurs when the government borrows a lot of money to finance its spending, causing interest rates to increase. This increase in interest rates makes it more expensive for individuals and businesses to borrow money, reducing their willingness to invest and potentially leading to a decrease in economic growth. This can be seen as a trade-off between government spending and private investment.

_____ Occur(s) When Government Spending Results in Persistent Deficits That