What will be the long run effect

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Problem 1: All else equal, if the Government of Canada chooses to embark on a policy of increased budget deficits through higher spending, what will be the long run effects? (For simplicity, assume the closed economy with government model of loanable funds we covered in this class.)

a. None of the answers offered are accurate.
b. NS will shift right, decreasing real interest rates and increasing investment and growth.
c. will shift right, increasing real interest rates and growth.
d. NS will shift left, increasing real interest rates and reducing investment and growth.
e. will shift left, lowering real interest rates and growth.

Reference no: EM132969734

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