If the federal government borrows from the private sector to pay for increased budget deficits and interest rates increase, this will cause
A) a decrease in planned investment and planned consumption.
B) an increase in planned investment and planned consumption.
C) a decrease in planned investment and an increase in planned consumption.
D) an increase in planned investment and a decrease in planned consumption.
A
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An economic principle that explains why countries produce different goods and services is
A) trade as a percentage of GDP. B) absolute advantage. C) NAFTA. D) comparative advantage.
If the spot exchange rate between dollars and pounds is equal to 2 dollars for one pound and the forward exchange rate equals 2.10 dollars for one pound, then
A) the dollar is trading at a forward premium. B) the pound is trading at a forward discount. C) the pound is trading at a forward premium. D) the market presents an opportunity for arbitrage.