In 2021, an article in the Economist discussed the fact that many developing countries had increased...

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In 2021, an article in the Economist discussed the fact that many developing countries had increased government spending financed by borrowing. The article noted that: "Economists have long worried that public borrowing can crowd out private investment... That is less of a concern if the government spends on investment. (India's central government, for example, has budgeted a 26% increase in capital spending in the coming fiscal year.) It is also less of a worry if the economy is operating below capacity." Source: "Should Governments in Emerging Economies Worry about Their Debt?" Economist, February 11, 2021. a. Why is crowding out less of a concern if the government is spending on investment? A. Governments borrow at a different interest rate than do private firms and their spending does not affect private interest rates. B. Governments can increase the economy's productive capacity and therefore offset some of the lower levels of private investment. C. Governments spend so much more on investment than do private firms, so it does not matter how private firms spend their money. D. Governments spend money in the same areas that private investment does, so it does not matter who actually does investment spending. b. Why is crowding out less of a concern if the economy is operating below capacity? A. With excess capacity, governments will spend less on investment than do private firms, so it does not matter how private firms choose to invest. B. Excess capacity indicates firms are likely not to significantly invest, minimizing possible crowding out. C. Excess capacity indicates firms are likely to significantly invest regardless of government investment, minimizing possible crowding out. D. With excess capacity, governments spend so much more on investment than do private firms, so it does not matter how private firms choose to invest. In 2021, an article in the Economist discussed the fact that many developing countries had increased government spending financed by borrowing. The article noted that: "Economists have long worried that public borrowing can crowd out private investment... That is less of a concern if the government spends on investment. (India's central government, for example, has budgeted a 26% increase in capital spending in the coming fiscal year.) It is also less of a worry if the economy is operating below capacity." Source: "Should Governments in Emerging Economies Worry about Their Debt?" Economist, February 11, 2021. a. Why is crowding out less of a concern if the government is spending on investment? A. Governments borrow at a different interest rate than do private firms and their spending does not affect private interest rates. B. Governments can increase the economy's productive capacity and therefore offset some of the lower levels of private investment. C. Governments spend so much more on investment than do private firms, so it does not matter how private firms spend their money. D. Governments spend money in the same areas that private investment does, so it does not matter who actually does investment spending. b. Why is crowding out less of a concern if the economy is operating below capacity? A. With excess capacity, governments will spend less on investment than do private firms, so it does not matter how private firms choose to invest. B. Excess capacity indicates firms are likely not to significantly invest, minimizing possible crowding out. C. Excess capacity indicates firms are likely to significantly invest regardless of government investment, minimizing possible crowding out. D. With excess capacity, governments spend so much more on investment than do private firms, so it does not matter how private firms choose to invest.

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