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The crowding-out effect stresses that Group of answer choices an increase in government expenditures will stimulate aggregate demand and, thereby, help to prevent recessions. an increase in taxes will restrain aggregate demand and, thereby, help to control inflation. additional government borrowing to finance a larger deficit will increase the demand for loanable funds, causing real interest rates to rise. a budget deficit is a highly effective tool with which to combat recessions. both a and d are correct.

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Parrain

The crowding-out effect is such that additional government borrowing to finance a larger deficit will increase the demand for loanable funds, causing real interest rates to rise.

What is the crowding-out effect?

The crowing-out effect refers to when the government borrows so much money that they make it hard for businesses to borrow and invest in new projects.

This happens because the government borrowing will decrease the amount of funds that can be borrowed in the market which will lead to higher interest rates for the remaining funds.

Find out more on crowding out at https://brainly.com/question/995089.

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