<Ul> <Li> </Li> <Li> </Li> <Li> </Li> </Ul> <P> In economics, crowding out is argued by some economists to be a phenomenon that occurs when increased government involvement in a sector of the market economy substantially affects the remainder of the market, either on the supply or demand side of the market . </P> <P> One type frequently discussed is when expansionary fiscal policy reduces investment spending by the private sector . The Government is "crowding out" investment because it is demanding more Loanable Funds and it is increasing interest rates from the borrowing, but that was broadened to multiple channels that might leave total output little changed or smaller . </P> <P> Other economists use "crowding out" to refer to government providing a service or good that would otherwise be a business opportunity for private industry, and be subject only to the economic forces seen in voluntary exchange . </P>

Increased government borrowing to cover a budget deficit causes