Deficit spending: increases the government's demand for loanable funds, A. driving up interest rates causes higher interest rates, which crowd out investment reduces present investment, which leads to slower С. economic growth in the future D. All of the above B.

Deficit spending: increases the government's demand for loanable funds, A. driving up interest rates causes higher interest rates, which crowd out investment reduces present investment, which leads to slower С. economic growth in the future D. All of the above B.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 1DQ

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Question

Deficit spending:
increases the government's
demand for loanable funds,
driving up interest rates
А.
causes higher interest rates,
which crowd out investment
C.
reduces present investment,
which leads to slower
economic growth in the
future
D.
All of the above
B.

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