question archive An increase in deficit spending tends to raise interest rates, thereby resulting in a multiplier effect that is higher than what would be associated with an equivalent increase in consumption spending
An increase in deficit spending tends to raise interest rates, thereby resulting in a multiplier effect that is higher than what would be associated with an equivalent increase in consumption spending
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An increase in deficit spending tends to raise interest rates, thereby resulting in a multiplier effect that is higher than what would be associated with an equivalent increase in consumption spending. True or false?
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This statement is false
Deficit spending would cater to the situation of the crowding out. As a result, funds in the financial markets for private firms would decline in the effect of increased interest rates. The multiplier effect stays stronger when the determinants of aggregate demand would undertake the economic actions.
