Increases in government expenditures and large budget deficits are projected for 2010-2019.The crowding-out and new classical views indicate this fiscal policy will lead to

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The crowding-out view suggests that when the government increases its spending, it will compete with the private sector, leading to higher interest rates and reducing private investment. This will slow down economic growth. Similarly, the new classical view suggests that deficits will lead to higher interest rates and inflation, reducing economic growth. Therefore, both views suggest that increases in government expenditures and large budget deficits will lead to higher interest rates and tax rates, which will slow economic growth.

Increases in Government Expenditures and Large Budget Deficits Are Projected