For a given level of private saving, an increase in the growth of government purchases will likely the economy's long- run growth rate.

Question

Quizplus · Accepted Answer

An increase in government purchases will lead to an increase in government spending, which can lead to crowding out of private investment. This can result in a lower long-run growth rate as private investment is an important factor in promoting economic growth. Therefore, an increase in government purchases will likely slow down the economy's long-run growth rate.

For a Given Level of Private Saving, an Increase in the Growth