If a Budget Deficit Increases Interest Rates, It Is Possible

question 158

Multiple Choice

If a budget deficit increases interest rates, it is possible that investment will

• A)fall, leading to a larger capital stock.
• B)fall, so that there is a smaller capital stock.
• C)rise, because investment is directly related to interest rates.
• D)rise, because investment is more attractive when interest rates are higher.

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Definitions:

Destructive

Destructive refers to causing damage or harm in a manner that leads to the deterioration or annihilation of something.

Psychotic

Pertaining to psychosis, a severe mental disorder in which thought and emotions are so impaired that contact is lost with external reality.

Idealizes

The act of envisioning or depicting someone or something in an ideal form, often overlooking flaws or realities.

Unconditional Love

Love given without conditions or limitations, often described as true or pure love.