(Figure: Loanable Funds Market III) Use Figure: Loanable Funds Market III. If the government in a closed...
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Question:
(Figure: Loanable Funds Market III) Use Figure: Loanable Funds Market III. If the government in a closed economy is running a budget balance of zero when it decides to increase defence spending by $200 billion and then finances the spending by selling bonds, the government will crowd out a maximum of _____ in private investment spending. Select one:
a. $50 billion
b. $10 billion
c. $200 billion
d. $100 billion
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