It was reported in June $2021,$ that the US Federal Budget deficit reached a record high of $$2\mathrm{.}1$ trillion following the COVID$-19$ pandemic. Most of the deficit was propelled by increased spending on joblessness compensations, nutrition assistance $($Food stamps$),$ and COVID$-19$ relief programs.

Based on your understanding of Budget deficit and national debt, explain the effects of the US budget deficit on US private investment spending, the real interest rate, and long$-$run economic growth rates.

Increase in Government deficit will raise the real interest rates. If Investment falls, the future generation has less capital and long run growth rate rises.

Increase in Government deficit will raise the real interest rates. If Investment falls, the future generation has less capital and long run growth rate declines.

Increase in Government deficit will reduce the real interest rates. If Investment rises, the future generation has more capital and long run growth rate rises.

Increase in Government deficit will reduce the real interest rates. If Investment rises, the future generation has less capital and long run growth rate falls,