Consider a Closed-Economy AD/AS Model

question 87

Multiple Choice

Consider a closed-economy AD/AS model.If an increase in the government's budget deficit drives up market interest rates,

• A)credit will become less expensive.
• B)nothing - government borrowing cannot push up interest rates.
• C)private expenditure will likely increase.
• D)some private investment expenditure will probably be crowded out.
• E)the money supply will increase.