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Crowding out (economics) facts for kids

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In economics, crowding out happens when the government starts buying or selling more stuff in the market. This affects other people and businesses--usually in a bad way.

For example, if the government buys more stuff, it may have to borrow more. By borrowing more there will be a higher interest rate (see supply and demand). This will make it harder for other companies and people to borrow. The government is said to "crowd out" the market.

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