The concept that increased government spending will lead to lower investment and consumer spending is referred to as the

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The crowding-out effect is the concept that increased government spending will lead to a decrease in investment and consumer spending because of the competition for resources such as money, labor, and equipment. This can happen because higher government spending leads to higher interest rates, reducing the incentives for private investment, and increasing the costs of borrowing for consumers. This concept is based on Keynesian economics, which suggests that government intervention can stimulate economic growth during a recession, but there are limits to how much the government can spend before it starts to have negative effects.

The Concept That Increased Government Spending Will Lead to Lower