The table gives data on interest rates and investment demand (in billions of dollars) in a hypothetical economy. Refer to the above table. Using the I_d1 schedule, assume that the government needs to finance the public debt and this public borrowing increases the interest rate from 3% to 4%. How much crowding out of private investment will occur?

Question

Quizplus · Accepted Answer

The Answer of The table gives data on interest rates and investment demand (in billions of dollars) in a hypothetical economy. Refer to the above table. Using the I_d1 schedule, assume that the government needs to finance the public debt and this public borrowing increases the interest rate from 3% to 4%. How much crowding out of private investment will occur?

The Table Gives Data on Interest Rates and Investment Demand