Lower deficits should lead to higher levels of private investment spending.

Name: Lower deficits should lead to higher levels of private investment spending.
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Question

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Lower deficits lead to lower government borrowing, thereby reducing the competition for funds in the loanable funds market. The decrease in demand for funds may lead to lower interest rates, making it cheaper for businesses to borrow and invest in new projects. This can result in higher levels of private investment spending.

Lower Deficits Should Lead to Higher Levels of Private Investment