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

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The crowding out effect occurs when government spending increases and causes a decrease in private spending. This can happen because the government may have to borrow money to finance the spending, which can increase interest rates and make it more difficult for individuals and businesses to borrow and spend money. As a result, private spending may decrease, resulting in a crowding out effect. The stabilizer effect relates to automatic stabilizers that help to stabilize the economy during economic downturns. The multiplier effect refers to the idea that a change in spending can have a magnified effect on the economy. Government deficit spending refers to when the government spends more money than it collects in revenue, which can lead to an increase in the national debt.

When Private Expenditures Decrease as a Result of Increased Government