--%>
Assignment Help - homework help

Cause-and-effect chain

Mark out the cause-and-effect chain through which refinancing and financing of the public debt might influence real interest rates, the stock of capital, private investment and economic development. How might investment in public capital & complementarities among public & private capital alter the outcome of the cause-effect chain?

E

Expert

Verified

Cause and effect chain:  Government borrowing to finance the debt competes along with private borrowing & drives up the interest rate; the higher interest rate causes a decline in private capital and economic growth slowdown.

Though, if public investment complements private investment, private borrowers might be ready to pay higher rates for positive growth chance.  Productivity and economic growth could increase.

 

   Related Questions in Finance Basics

  • Q : Define Accrual Basis of Accounting

    Accrual Basis of Accounting: The foundation of accounting in which transactions are identified whenever they take place, regardless of when cash is disbursed or received. The revenue is recorded whenever earned, and expenses are recor

    		•
  • Q : Explain Appropriated Revenue

    Appropriated Revenue: The revenue which, as it is earned is reserved and appropriated for a particular aim. An illustration is student fees received by state colleges which are by law appropriated for the support of the colleges. The

    		•
  • Q : Describe working capital Describe

    Describe working capital? Working capital contains the current assets of the firm.

    		•
  • Q : Define the term Technical Technical :

    Technical: In the budget systems, refers to an amendment which clarifies, accurate, or else does not materially influence the purpose of a bill.

    		•
  • Q : Size of the labour force net population

    Normal 0 false false

    		•
  • Q : How does preemptive right secure

    How does a preemptive right secure the interests of present stockholders? A preemptive right secure the interests of existing stockholders through giving them the chance to preempt other investors into the purchase of new shares. If these right

    		•
  • Q : Production possibilities curve based

    Given is a production possibilities table for consumer goods (automobiles) and capital goods (forklifts): Illustrates these data graphica

    		•
  • Q : Describe who owns a credit union

    Describe who owns a credit union? Credit unions are owned through their members. While credit union members put money in their credit union, they are not "depositing" the money technically.  In spite of, they are purchasing shares of the cr

    		•
  • Q : Growth rate of its real GDP Normal 0

    Normal 0 false false

    		•
  • Q : The official unemployment rate Normal 0

    Normal 0 false false

    		•