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Crowding out

AP.MACRO: POL‑3.C (LO), POL‑3.C.1 (EK), POL‑3.C.2 (EK), POL‑3.C.3 (EK), POL‑3.C.4 (EK)

Problem

An economy has a budget deficit, and you want to show the impact of the budget deficit on the real interest rate.
What model would you use, and what would be the impact on the interest rate?
Choose 1 answer:
Choose 1 answer: