The crowding-out effect implies that restrictive fiscal policy will

The correct answer to the following question will be "reduce real interest rates ".

Explanation:

Such an effect seems to be an economic philosophy or model which argues that rising expenditure throughout the public services, as well as administration, is pushing down or indeed eliminating corporate sector consumption.

There will be 3 major explanations for the impact of crowding-out:

Social-welfare. Infrastructure. Economics.

This means whether conservative fiscal policies would lower interest rates. In comparison, government debt indicates that revenue will potentially increase by creating jobs