The government spends more on public libraries and individuals buy fewer books at bookstores. Is this crowding out?

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This would be an example of crowding out because the government is supplying the books for people to read. There is an increase in government spending and a decrease in the money being spent in private companies which are the bookstores. People do not need to go to the bookstore...

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This would be an example of crowding out because the government is supplying the books for people to read. There is an increase in government spending and a decrease in the money being spent in private companies which are the bookstores. People do not need to go to the bookstore to purchase these books but instead go to the libraries and check them out for "free." This burdens the private companies because they will potentially have a decrease in sales.

It is important to keep in mind that in order to build new libraries and stock them with books, they need money. This money is going to come from tax increases.

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This is not the way that the term is used in textbooks I have taught from.  The texts I've used use this term to mean that private investment has gone down because of excessive government debt.

However, the idea is pretty much the same as what you are talking about.  You are talking about a situation where what the government does, in essence, competes with private enterprise.

So if your text and/or teacher uses crowding out to mean this kind of more generic thing, this would be a case of crowding out.

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