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这通常是由政府开支增加造成的。如果政府增加支出，而税收增加，这将意味着，政府将借更多的资金，以资助其开支，并在这个过程中，利率将更高。这种效应将减少私人投资，由于降低私人借款和高利率，公司和个人不再支付。总之，“问题发生时，政府债务挤兑民营企业和个人贷款市场”。如果政府决定提高利率，这将影响收入，这是在一定的利率均衡水平时的储蓄，以及其他经济参与者的消费者可能会选择做无本收入等于投资。由于高利率降低固定资产投资的乘数效应，降低了实际GDP。这将解释整个转变。简单来说，经济曲线会受到影响，因为在真正意义上，它只是代表了利率，以减少计划的固定投资和减少国民收入和产出的因果关系。

Crowding out is a condition that occurs when there is a reduction in private consumption or even private investment. This is usually caused by an increase fin the government expenditure. In case the government increases its expenditure, while doing nothing on tax increase, it will mean that, the government will borrow more to finance its expenses, and in the process, interest rates will tent to go higher. This as an effect will reduce private investment, due to reduced private borrowing as a result of high interest rates which corporations and individual no longer afford to pay. In summary, 'the problem occurs when government debt 'crowds out' private companies and individuals from the lending market' (Herman & Daly, 2003). Considering the term crowding out in health economics, is a condition which occurs when programs that were expanded with the aim of covering the uninsured, have resulted to an effect of promoting the already enrolled in private insurance to change to the new programs.

In looking at the effects of an increase in the government spending on the IS curve, it is good to explain first that, the independent in an IS curve is the interest rate, while the dependent variable is the income level. The curve is usually drawn down slopping with interest rate on the vertical axis while GDP on the horizontal axis. An increase in the government spending will mean that, 'consumer spending + planned private investment + government purchases + net exports' (Herman & Daly, 2003),is not equals an economy's total output (equivalent to real income, Y, or GDP). This is because; an increase in government spending might affect the interest rates. For instance, if the government decides to raise the interest rates, fixed investment and the likes will be discouraged, which will then affect the income , which is at the equilibrium level for a given interest rate when the saving that the consumers along with other participants in the economy might choose to do out without of this income equals investment. The multiplier effect of a reduced fixed investment as a result of higher interest rates lowers the real GDP. This will then explain the entire shift of the IS curve on the right. In simple terms, the curve will be affected because in real sense, it just represents the causation from the increasing rates to reducing planned fixed investment and the likes to reducing national income and the output.

An increase in the supply of money, will lead to different alterations on the LM curve. For instance, the vertical intercept lets say (r) will be lower, while the horizontal intercept say (y, will be larger, as an effect, the whole LM curve will move to the right. In addition, the exogenous alterations that might bring about the excess money supply, that is, driving money supply above the money demand, will make the interest rates to rise in order to lower money demand along with equilibrating the demand of money, and the money supply. This will shift the LM curve out too. Another factor arising on the LM curve due to an increase in money supply is that, an increase in money supply will make individuals to put extra