coley9223 coley9223
  • 18-06-2020
  • Social Studies
contestada

While we have a budget deficit as per the crowding out concept what would happen to interest rates and borrowing?

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Аноним Аноним
  • 18-06-2020

Answer:

When the economy is operating near capacity, government borrowing to finance an increase in the deficit causes interest rates to rise. Higher interest rates reduce or “crowd out” private investment, and this reduces growth.

Explanation:

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