Suppose the government needs to borrow money to pay for fighting a war in a foreign land.
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Suppose the government needs to borrow money to pay for fighting a war in a foreign land. Show that increased borrowing by the government-an increase in the government's demand for money at any given interest rate-raises the equilibrium interest rate, which discourages or crowds out private investment.
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Using three sidebyside graphs show how an outward shift of the governments demand curve affects the ...View the full answer
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