Which refers to the decrease in private spending when government spending increases?
A) the multiplier effect
B) the timing effect
C) the automatic stabilizing effect
D) the crowding out effect

Question

Quizplus · Accepted Answer

The decrease in private spending when government spending increases is known as the crowding out effect. This occurs because as government borrowing increases to fund its spending, it reduces the availability of loanable funds for private investment, leading to a decline in private spending.

Which Refers to the Decrease in Private Spending When Government