Macro Unit 4, Question 15- Crowding Out

The video tutorial explains the concept of crowding out in the loanable funds market, where increased government spending leads to higher demand for loans, raising real interest rates and reducing private sector investment. An example is provided to illustrate how businesses are affected. The tutorial emphasizes the importance of understanding this concept for AP tests, as it frequently appears in exam questions related to deficit spending and the loanable funds market.

What new insight or understanding did you gain from this video?