Explain (in words and with aid of a graph) the crowding out effect of government deficit spending. If the savings function is not perfectly inelastic but positively responds to interest rate changes, would the adverse effect of crowding out be reduced or would it worsen?
Explain (in words and with aid of a graph) the crowding out effect of government deficit spending. If the savings function is not perfectly inelastic but positively responds to interest rate changes, would the adverse effect of crowding out be reduced or would it worsen?
Chapter17: Federal Deficits, Surpluses, And The National Debt
Section: Chapter Questions
Problem 6SQP
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Transcribed Image Text:Explain (in words and with aid of a graph) the crowding out effect of government deficit
spending. If the savings function is not perfectly inelastic but positively responds to interest
rate changes, would the adverse effect of crowding out be reduced or would it worsen?
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