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Answer to Question #80430 in Macroeconomics for Tiyani Hlungwani
Question #80430
6. The crowding out effect refers to how a government budget deficit ___ the demand for loanable funds. This leads to ___ real interest rates that ___ investment.
Expert's answer
The crowding out effect refers to how a government budget deficit increases the demand for loanable funds. This leads to raise real interest rates that decreases investment.
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