The crowding-out effect of fiscal policy arises from borrowing to finance deficit spending.

Name: The crowding-out effect of fiscal policy arises from borrowing to finance deficit spending.
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Question

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The crowding-out effect occurs when government borrowing increases interest rates, making it more expensive for individuals and businesses to borrow and reducing their willingness to invest, which may lead to a decrease in private sector spending and investment.

The Crowding-Out Effect of Fiscal Policy Arises from Borrowing to Finance