Problems related to fiscal policy may include AAll of these

Problems related to fiscal policy may include

A.All of these.

B.lower government spending.

C.changing interest rates may not impact AD.

D.less economic growth.

Solution

Crowding out effect is indeed the main problem of fiscal policy where during expansionary fiscal policy there can be reduced investment due to increase in interest rates and this is due to high government spending and it shifts the AD and there will be less economic growth on the whole.

Therefore (D) less economic growth is the answer