Exploring Economics
7th Edition
ISBN: 9781305465596
Author: Sexton
Publisher: Cengage
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Chapter 24, Problem 16P
To determine
(a)
To explain:
The crowding out effect caused by an increase in government purchases.
To determine
(b)
To explain:
The reason for the value of the crowding-out effect depends on the responsiveness of the interest rate towards the increased government borrowings and to the change in interest rates.
To determine
(c)
To explain:
Theway the size of the crowding-out effect can affect the size of the change in aggregate demand.
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