When government spending results in higher interest rates due to rising debt, what happens to consumption and investment according to a monetarist economist? Consumption and investment decrease due to the liquidity trap. Consumption and investment increase due to the crowding-out effect. Consumption and investment decrease due to the crowding-out effect. Consumption and investment increase due to the liquidity trap.
When government spending results in higher interest rates due to rising debt, what happens to consumption and investment according to a monetarist economist? Consumption and investment decrease due to the liquidity trap. Consumption and investment increase due to the crowding-out effect. Consumption and investment decrease due to the crowding-out effect. Consumption and investment increase due to the liquidity trap.
Chapter20: Monetary Policy
Section: Chapter Questions
Problem 20SQ
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When government spending results in higher interest rates due to rising debt, what happens to consumption and investment according to a monetarist economist?
Consumption and investment decrease due to the liquidity trap.
Consumption and investment increase due to the crowding-out effect.
Consumption and investment decrease due to the crowding-out effect.
Consumption and investment increase due to the liquidity trap.
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