10. Crowding-out effect Which of the following statements is correct? If most of the deficit is spent on current consumption, we expect the economy's productivity to increase. Large budget deficits may reduce private investment, thereby stifling economic growth. o The government must buy bonds from the public to finance its spending. Crowding out refers to the decrease in private investment stemming from an increase in consumer spending. The following graph shows the demand for private investment. Activity Frame Show the crowding-out effect of deficit spending on the demand for investment by moving the dot, dragging the investment demand (ID) curve, or both. INTEREST RATE Note: Select and drag the curve to the desired position. The curve will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. INVESTMENT 0₁ Point Along ID

10. Crowding-out effect Which of the following statements is correct? If most of the deficit is spent on current consumption, we expect the economy's productivity to increase. Large budget deficits may reduce private investment, thereby stifling economic growth. o The government must buy bonds from the public to finance its spending. Crowding out refers to the decrease in private investment stemming from an increase in consumer spending. The following graph shows the demand for private investment. Activity Frame Show the crowding-out effect of deficit spending on the demand for investment by moving the dot, dragging the investment demand (ID) curve, or both. INTEREST RATE Note: Select and drag the curve to the desired position. The curve will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. INVESTMENT 0₁ Point Along ID

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Solve all this question ........you will not solve all questions then i will give you down upvote......

10. Crowding-out effect
Which of the following statements is correct?
If most of the deficit is spent on current consumption, we expect the economy's
productivity to increase.
o Large budget deficits may reduce private investment, thereby stifling economic growth.
o The government must buy bonds from the public to finance its spending.
O Crowding out refers to the decrease in private investment stemming from an increase in
consumer spending.
The following graph shows the demand for private investment.
Show the crowding-out effect of deficit spending on the demand for investment by moving the dot,
dragging the investment demand (ID) curve, or both.
INTEREST RATE
Activity Frame
Note: Select and drag the curve to the desired position. The curve will snap into position, so if you
try to move a curve and it snaps back to its original position, just drag it a little farther.
(?)
INVESTMENT
ID
ID
Point Along ID

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