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Refer to the Above Diagram

Question 120

Multiple Choice

Refer to the above diagram.Initially assume that the investment demand curve is I<sub>d1</sub>.Which of the following effects of a budget deficit might shift the investment demand curve from I<sub>d1</sub> to I<sub>d2</sub>, wholly offsetting any crowding-out effect? A) an improvement in profit expectations by businesses B) a decrease in saving C) a decline in the interest rate D) an increase in the marginal propensity to consume Refer to the above diagram.Initially assume that the investment demand curve is Id1.Which of the following effects of a budget deficit might shift the investment demand curve from Id1 to Id2, wholly offsetting any crowding-out effect?


A) an improvement in profit expectations by businesses
B) a decrease in saving
C) a decline in the interest rate
D) an increase in the marginal propensity to consume

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