An Increase in the Budget Deficit Makes Domestic Interest Rates

question 4

Multiple Choice

An increase in the budget deficit makes domestic interest rates

• A)rise because the supply of loanable funds shifts left.
• B)fall because the supply of loanable funds shifts left.
• C)rise because the demand for loanable funds shifts right.
• D)fall because the demand for loanable funds shifts right.

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Definitions:

Variable Cost

Costs that vary directly with the level of production or the volume of services provided.

Fixed Expense

Costs that remain unchanged over a specified period despite variations in business activity levels, such as lease payments or salaries for permanent staff.

Break-even

The point at which total costs and total revenues are equal, meaning no profit or loss is incurred.

Break-even Point

The point where total costs and total revenues are the same, leading to neither profit nor loss in sales or production levels.