Is This Statement Correct?
Higher Government Spending may lead to higher interest rates and lower private sector investing.
If yes please explain.
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Yes this is correct. It may happen
If there is high government spending. Government needs to borrow, it raises huge debt so interest rate goes up.
If interest rates goes up, it means Kc of the firm’s will rise so they won’t take.up projects. So Investment down.
Hope.it helps