Suppose the Government Deficit Increases,but the Interest Rate Remains the Same.Which

question 31

Multiple Choice

Suppose the government deficit increases,but the interest rate remains the same.Which of the following things might have happened simultaneously to keep interest rates the same?

• A)The government reduces the amount that people may put into savings accounts on which the interest is tax exempt.
• B)Because they are optimistic about the future of the economy,firms desire to borrow more to purchase physical capital.
• C)Consumers decide to decrease consumption and work more.
• D)All of the above could explain why the interest rate would be unchanged.

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Definitions:

Expression

A combination of symbols that represents a quantity or a relationship between quantities in mathematics or computer programming.

Rationalize

The process of modifying an expression to eliminate radicals from the denominator or complex numbers from the denominator of a fraction.

Denominator

The bottom part of a fraction that tells into how many equal parts the whole is divided.

Simplify

To simplify a mathematical expression to its most basic form.