Question

Assume that while the budget balance in Conania changes from positive to negative, capital inflow in Conania also decreases. How will this affect private investment spending in Conania

Answer 1

Answer and Explanation:

In the case when the budget balance of the Conania varies i.e. from positive to negative so the capital inflow would decrease

Now this impact private investment spending in such a way that the situation would become worst and this would lead a serious crowding effect that ultimately reduce the economy

Hence, the same is relevant