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1. For the next two questions, consider the graph below, showing the equilibrium interest rate and financial capital for an economy that runs budget deficits.

1. For the next two questions, consider the graph below, showing the equilibrium interest rate and financial capital for an economy that runs budget deficits. If those budget deficits decrease, how will that impact the demand for financial capital, the interest rate and, therefore, private investment (everything else hold constant)?

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