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    Foundations of Macroeconomics Study Set 1
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    Exam 10: Finance, Saving, and Investment
  5. Question
    "A Government Surplus Can Decrease Investment Through the Crowding-Out Effect
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"A Government Surplus Can Decrease Investment Through the Crowding-Out Effect

Question 245

Question 245

Essay

"A government surplus can decrease investment through the crowding-out effect because the surplus decreases the supply of loanable funds." Is the previous assertion right or wrong?
Why?

Correct Answer:

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The assertion is wrong on two counts.Fir...

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