Government borrowing is argued to have the effect of raising interest rates-the "crowding-out effect." In conjunction with government spending,does government spending and borrowing have a positive or negative impact on the economy?

Question

Quizplus · Accepted Answer

Government spending can have a positive impact on the economy by stimulating economic growth and creating jobs. While government borrowing may lead to higher interest rates, the overall impact of government spending can outweigh this effect, as long as it is done in a responsible and sustainable manner. In fact, during times of economic recession, increased government spending and borrowing can be necessary to prevent a further downturn in the economy.

Government Borrowing Is Argued to Have the Effect of Raising