This borrowing may have a negative impact by crowding out private investment.
Explanation:
When the government goest into deficit spending to stimulate the economy in times when the economy is slowing down, what happens is that the government now demands more loanable funds: it demands a higher proportion of the savings in the economy in the form of government bonds.
This higher government demand for loanable funds crowds out private investment for two reasons:
It raises the interest rate, making private investment more expensive.
It reduces the amount of loanable funds available for the private sector (because it takes over a larger share of them).
Villages and towns were built around ubaid farming communities. They are known as Sumerians. They were in control of the area by 3000 B.C. Their culture was comprised of a group of city-states.
