(Solved): Which of the following statements is correct? Crowding out refers to the decrease in privat ...

Which of the following statements is correct? Crowding out refers to the decrease in private investment stemming from an increase in consumer spending. The government must buy bonds from the public to finance its spending. Large budget deficits may reduce private investment, thereby stifling economic growth. If most of the deficit is spent on current consumption, we expect the economy's productivity to increase. The following graph shows the demand for private investment. Assume all types of public infrastructure are complementary with private investment. Show how an increase in government spending on public infrastructure affects the demand for private investment by draggi (?) $0$ ID ID