Crowding out can be observed in the national saving and investment identity formula S+(M-X) = 1 + (G-T) If the national savings (S) and the trade balance (M-X) do not change, then increased budget deficits could have all of the following effects EXCEPT: a. private investment will fall b. investments could be made in public projects which are less productive than private investments C. investments could be reduced or delayed in important physical plant and equipment d. interest rates will fall hurting financial institutions who earn higher profits with higher interest rates

Crowding out can be observed in the national saving and investment identity formula S+(M-X) = 1 + (G-T) If the national savings (S) and the trade balance (M-X) do not change, then increased budget deficits could have all of the following effects EXCEPT: a. private investment will fall b. investments could be made in public projects which are less productive than private investments C. investments could be reduced or delayed in important physical plant and equipment d. interest rates will fall hurting financial institutions who earn higher profits with higher interest rates

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter4: The Aggregate Economy

Section: Chapter Questions

Problem 5E

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