The following is an investment schedule. Investment spending is in billions of dollars.
Refer to the data in the table above. When the government runs a budget deficit and issues more Treasury securities, crowding out would occur if:
A. The interest rate is at 0%
B. The interest rate rises
C. The interest rate falls
D. The interest rate stays high at 8%
B. The interest rate rises
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A decrease in the real interest rate will
A) increase consumption and investment. B) increase consumption and reduce investment. C) increase saving and investment. D) decrease investment and government spending.
Which is not true of market equilibrium?
A. Circumstances can change from day to day which make any equilibrium very tentative. B. All sellers who want to sell at the equilibrium price can find a buyer to sell to. C. All buyers who want to buy at the equilibrium price can find a seller to buy from. D. It is the most desirable outcome that a social order could have.