Explain how a government budget deficit might crowd out private investment
What will be an ideal response?
If there is no Ricardo-Barro effect, a government budget deficit increases the demand for loanable funds. As a result, the equilibrium real interest rate rises and the equilibrium quantity of loanable funds increases. But the rise in the real interest rate decreases investment. The government's budget deficit has thus "crowded out investment."
Economics
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Under the European System of Central Banks, the National Central Banks have the same role as the ________ of the Federal Reserve System
A) Board of Governors B) Federal Open Market Committee C) Federal Reserve Banks D) Federal Advisory Council
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Why is the demand for foreign currencies known as a derived demand?
Economics