The table gives data on interest rates and investment demand (in billions of dollars) in a hypothetical economy. Refer to the above table. Assume that the public debt is used to expand the capital stock of the economy and that, as a consequence, the investment-demand schedule changes from Id₁ to Id₂. At the same time, the interest rate rises from 3% to 4% as the government borrows money to finance the public debt. How much crowding out of private investment will occur in this case?

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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. Assume that the public debt is used to expand the capital stock of the economy and that, as a consequence, the investment-demand schedule changes from Id₁ to Id₂. At the same time, the interest rate rises from 3% to 4% as the government borrows money to finance the public debt. How much crowding out of private investment will occur in this case?

The Table Gives Data on Interest Rates and Investment Demand