During the most recent recession,some economists argued that the change in the interest rates that comes about due todeficit spending implied in the demand and supply of financial capital graph would not occur. A simple reason was that the government was stepping in to invest when private firms were not. Using a graph, explain how the use by government ininvestment off sets the deficit demand.

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter31: The Impacts Of Government Borrowing
Section: Chapter Questions
Problem 29P: During the most recent recession, some economists argued that the change in the interest rates that...
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During the most recent recession,some economists argued that the change in the interest rates that comes about due todeficit spending implied in the demand and supply of financial capital graph would not occur. A simple reason was that the government was stepping in to invest when private firms were not. Using a graph, explain how the use by government ininvestment off sets the deficit demand.

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