Interest Rate (%) 20 18 16 14 12 10 8 642 ID₂ ID₁ 5 10 15 20 25 30 35 40 45 50 Investment ($B) Refer to the diagram. Assume that the investment demand curve is ID1. The crowding-out effect of a large public debt would be shown as a(n) shift of the investment demand curve from ID₁ to ID₂. O leftward shift of the investment demand curve. O increase in the interest rate from 4 percent to 6 percent and a decline in investment spending of $5 billion. O increase in the interest rate from 6 percent to 8 percent and a decline in investment spending of $40 billion.

Interest Rate (%) 20 18 16 14 12 10 8 642 ID₂ ID₁ 5 10 15 20 25 30 35 40 45 50 Investment ($B) Refer to the diagram. Assume that the investment demand curve is ID1. The crowding-out effect of a large public debt would be shown as a(n) shift of the investment demand curve from ID₁ to ID₂. O leftward shift of the investment demand curve. O increase in the interest rate from 4 percent to 6 percent and a decline in investment spending of $5 billion. O increase in the interest rate from 6 percent to 8 percent and a decline in investment spending of $40 billion.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter12: Federal Budgets And Public Policy

Section: Chapter Questions

Problem 3.6P

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