The crowding out effect tends to lead to higher:

The crowding out effect is a concept in economics that occurs when government spending leads to a reduction in private sector investment. When the government increases its borrowing to finance additional spending, it competes for available funds in the financial markets. This increased demand for capital typically drives up interest rates, as lenders require higher returns to compensate for the increased risk associated with a larger government debt.

As interest rates rise, borrowing costs for businesses and consumers also increase, which can discourage private investment in the economy. This means that while government spending may initially stimulate demand, the resulting higher interest rates may ultimately counteract those benefits by limiting private sector growth and spending. Therefore, the crowding out effect is closely associated with higher interest rates, making this the correct answer to the question.

In this context, tax revenues, public spending, and economic growth do not necessarily rise in tandem with the crowding out effect; in fact, they can be adversely impacted by the increase in interest rates, as higher borrowing costs deter private investment and consumption.