Suppose the government deficit increases, but the interest rate remains the same. Which of the following things might have happened simultaneously to keep interest rates the same?
a. The government reduces the amount that people may put into savings accounts on which the interest is tax exempt.
b. Because they are optimistic about the future of the economy, firms desire to borrow more to purchase physical capital.
c. Consumers decide to decrease consumption and work more.
d. All of the above could explain why the interest rate would be unchanged.
c
Economics
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For an imaginary economy, the value of the consumer price index was 140 in 2013 and 146.5 in 2014 . The economy's inflation rate for 2014 was
a. 4.6 percent. b. 6.5 percent. c. 4.4 percent. d. 46.5 percent.
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What will be an ideal response?
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