Question
When the government borrows money to finance its deficit, how does the resulting change in private investment affect capital accumulation and economic growth in the
When the government borrows money to finance its deficit, how does the resulting change in private investment affect capital accumulation and economic growth in the long run?
A. Physical capital accumulation decreases, and economic growth decreases.
B. Physical capital accumulation decreases, and economic growth remains unaffected.
C. Physical capital accumulation increases, and economic growth decreases.
D. Physical capital accumulation increases, and economic growth increases.
E. Physical capital accumulation remains unaffected, and economic growth decreases.
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