The Crowding-Out Effect Stresses That Increased Government Borrowing to Cover

question 89

Multiple Choice

The crowding-out effect stresses that increased government borrowing to cover a budget deficit will cause

• A) a higher interest rate and depreciation of the U.S. dollar.
• B) a higher interest rate and appreciation of the U.S. dollar.
• C) a lower interest rate and depreciation of the U.S. dollar.
• D) a lower interest rate and appreciation of the U.S. dollar.
• E) no change in the interest rate and depreciation of the U.S. dollar.

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