Economic theory suggests that ________ interest rates are ________ important than ________ interest rates in explaining investment behavior

Suppose that the federal government had a budget deficit of $80 billion in year 1 and $90 billion in year 2, but that it experiences budget surpluses of $40 billion in year 3 and $20 billion in year 4

Also assume that the government uses any budget surpluses to pay down the public debt. At the end of these four years, the Federal government's public debt would have A) increased by $110 billion. B) decreased by $57.5 billion. C) increased by $230 billion. D) decreased by $110 billion.

When foreign residents buy U.S. Treasury securities to finance the budget deficit

A) we can also anticipate a decrease in the trade deficit. B) the trade deficit will not be affected. C) we can also anticipate an increase in the trade deficit. D) the public debt will be reduced.