The Crowding Out Effect

This video lesson is on the crowding out effect.

[@JOSIAHRHOBI]

short, clear and precise... thanks man🤟🤟🤟

[@cherrywong1356]

Is the multiplier effect greater than the crowding out effect in this example?

[@ChrisThomas79]

@Cherry Wong, this video lesson is just an example of what the crowding out effect is and what would be the appropriate response in monetary policy to address the decrease in investment spending, which will shift AD to the left. However, I would like to think if we are looking at a multiplier effect addressing the decrease in AD which occurs because of the crowding out effect, if the MPC is greater than the MPS, there will be a greater shift in AD to the right. I hope this helps.