Final answer:
When the interest rate rises due to servicing the public debt, it will likely lead to a decline in private investment.
Step-by-step explanation:
When the interest rate rises from 6 to 10 percent as a result of servicing the public debt, it will have a negative impact on private investment as it will discourage borrowing and investment by businesses.
The increase in interest rates makes borrowing more expensive, which can reduce the profitability of new investments. As a result, businesses may decide to postpone or cancel their investment plans, leading to a decline in private investment.
Therefore, when the interest rate rises, private investment is likely to decline.