Assume the economy is closed and that it is operating at full employment. Which statement is TRUE when the size of the budget deficit decreases?
A) The increased amount of public goods will crowd out privately produced goods.
B) A reduction in the growth of productivity, and a reduction in society's standard of living will occur.
C) The interest rate will decrease, leading to an increase in investment and capital formation.
D) Demand and supply of credit will increase.
C
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Which of the following is an interest rate that the Fed has targeted in the last several years?
A) the prime rate B) the discount rate C) the government bond rate D) the federal funds rate
An engineer with a major power company decides to leave his job because he believes he has found a way to deliver Internet service across the electrical grid and he wants to start up his own business. He doesn't have very much cash or collateral
Which method of financing do you believe he will most likely use and why?