Which of the following conditions guarantees that an increase in the government budget deficit will NOT cause any crowding out of private investment in the short run?

Crowding out occurs when an expansionary fiscal policy raises the interest rate, which subsequently reduces private investment. The mechanism is: Government Expenditure ↑ → Aggregate Demand ↑ → Interest Rate ↑ → Private Investment ↓ However, suppose private investment is completely insensitive to changes in the interest rate. In that case: dI/dr = 0 Even if fiscal expansion causes the interest rate to rise, private investment does not decrease. Therefore, there is no crowding out of private investment. Hence, option (B) is correct.