The ___ effect occurs when massive government borrowing to finance a fiscal deficit drives up interest rates in the money market, thereby reducing or 'crowding out' private sector investment.

Answer: crowding out

When the government issues large amounts of bonds to fund its deficit, it competes with private corporations for the same pool of available savings. This increased demand for loanable funds pushes up the equilibrium interest rate, making it too expensive for private firms to borrow for new factories or equipment, ultimately stifling long-term economic growth.