During the 1980s, the size of the federal government debt became so large that servicing the interest

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During the 1980s, the size of the federal government debt became so large that servicing the interest payments became a significant portion of total federal expenditure. In response, many representatives and senators felt that the federal deficit needed to be reduced. If government spending (G) becomes negatively sensitive to changes in the interest rate, what effect does this have on the amount of autonomous consumption and planned investment that is crowded out? If autonomous taxes (Ta) become positively sensitive to changes in the interest rate, what effect does this have on the amount of autonomous consumption and planned investment that is crowded out?
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Macroeconomics

ISBN: 978-0138014919

12th edition

Authors: Robert J Gordon

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