Define the private investment

Reference no: EM131483355

Question: During the late 1990s, the Clinton administration had very low deficits and actually ran 3 years of surpluses. As a result, interest rates were low and private investment was vibrant. When the government runs large deficits, as it has done since the early 2000s, interest rates inevitably rise, crowding out private investment. In the aggregate demand and supply model, spending is spending; income and output rise the same amount no matter whether the government spent on goods and services or business spent on investment. Why then are economists concerned with the crowding out of private investment?

Reference no: EM131483355

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