In the Loanable Funds Market Model, ceteris paribus, it typically follows that when the federal government runs a budget deficit, there will be_ pressure on interest rates and pressure on private investment. This is referred to as Select one: O a. upward; upward; crowding out O b. upward; downward; crowding out c. downward; downward; financial intermediation d. downward; upward; financial intermediation.

In the Loanable Funds Market Model, ceteris paribus, it typically follows that when the federal government runs a budget deficit, there will be_ pressure on interest rates and pressure on private investment. This is referred to as Select one: O a. upward; upward; crowding out O b. upward; downward; crowding out c. downward; downward; financial intermediation d. downward; upward; financial intermediation.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4 Consider a small open economy with a perfectly elastic supply of savings at interest rate 7*, which is below the interest rate which would have prevailed in the economy if it could not have borrowed, and a normal investment curve. Show the market equilibrium, including the magnitude of foreign bon-owing. a Now show the effect of an increased budget deficit. b Show the effect of an increased budget deficit which originates as a result of increased public investment, in which the public investment is a complement to private investment.
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