Additional borrowings have increased the government expenditures and the resulting budget deficits cause a crowding out effect.
In order to run the economy more smoothly, the government within any economy should maintain the balance between the imports and the exports. If the exports become lower than the imports or the expenditures of the government has increased then the government will have to borrow some money from the central bank in order to bring the economy on the track. If still the situation of the economy worsens then the government will increase borrowing which will lead to the crowding out effect which will further result in budget deficit and increased interest rates.
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