An Increase in the Government Budget Deficit

question 18

Multiple Choice

An increase in the government budget deficit

• A) Has no impact on the real interest rate and fails to crowd out investment because foreigners buy assets in the deficit country.
• B) Decreases the real interest rate and crowds out investment.
• C) None of these answers
• D) Increases the real interest rate and crowds out investment.

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Definitions:

Contractual Obligations

are responsibilities or duties that are legally binding and arise from agreements or contracts entered into by parties.

Implied Condition

A condition that is not specifically and explicitly stated but is inferred from the nature and language of the contract.

Completion

The finalization or conclusion of a project, contract, or process, marking the end of work and the beginning of the operational period.

Bedroom

A room within a dwelling intended for sleeping or resting, typically containing a bed and storage furniture.