Business, 06.11.2019 03:31, queensnowflake32
Suppose that the investment demand curve in a certain economy is such that investment declines by $130 billion for every 1 percentage point increase in the real interest rate. also, suppose that the investment demand curve shifts rightward by $190 billion at each real interest rate for every 1 percentage point increase in the expected rate of return from investment. if stimulus spending (an expansionary fiscal policy) by government increases the real interest rate by 2 percentage points, but also raises the expected rate of return on investment by 1 percentage point, how much investment, if any, will be crowded out?
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