Fiscal stimulus that increases an existing government budget deficit increases the demand for loanable funds, which decreases investment.
When spending go beyond revenues, a budget deficit results, and it can be a good sign for a nation's finances. The term "budget deficit" is typically used by the government to describe spending rather than revenue from companies or people. National debt is made up of accrued deficits.
A government has a budget deficit when it spends more in a given year than it brings in through taxes, for example. As a straightforward illustration, consider a government that receives $10 billion in revenue one year but spends $12 billion, creating a $2 billion deficit.
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