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Assume that the government funds the increase in spending through increased borrowing C) What will be the impact of the policy action on the interest

Assume that the government funds the increase in spending through increased borrowing

C) What will be the impact of the policy action on the interest rate and quantity of loanable funds?

Draw correctly labeled graph

D) Given your answer, how will the private sector be affected? Is there any "crowding out"?

Explain. (Take help of graph if you want)

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