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Crowding Out Effect

In economics, the crowding out effect refers to the phenomenon wherein increased government spending leads to a decrease in private sector spending. This occurs when government borrowing to finance its expenditure pushes up interest rates, thereby reducing the availability of funds for private investment. As a result, private investment tends to decline, potentially offsetting the intended stimulative effects of government spending on overall economic activity. The concept of crowding out is fundamental in understanding the dynamics between government intervention and private sector behavior within a macroeconomic framework. Contact us on Social Media Tiktok:   / anthonyfok86   Instagram:   / anthonyfok86   ========================== 👇👇 Subscribe For More Videos 👇👇 https://rb.gy/0pkhx Peace ♥ #jceconomics #alevel #aleveleconomics #alevels #cambridge #sgparents #sgtuition #sgeconomics #juniorcollege #igcse #igcseeconomics