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Crowding out effect and its relation with Budget Deficit Explain it Briefly.


Crowding Out effect =
It can be said that crowding out effect is the type of economic theory, according to this theory people of the general public decreases their spending level resulting in the elimination of the private sector spending.
In Crowding Out effect people scare from spending due to various reasons which stop them to spend their income on various things, the reason may involve
interest rates , inflation, unavailability of various items etc
The high rate of interest is one of the most bad thing which give rise to decrease in investment level and becomes the main reason of budget deficit in most countries of the world.
So in order to maintain the public level spending, it is very necessary to keep the interest rates according to the requirements.  
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