When a Government Turns a Deficit into a Surplus We

question 2

Multiple Choice

When a government turns a deficit into a surplus we would expect

• A) interest rates to rise.
• B) interest rates to decrease.
• C) the demand curve for loanable funds to shift rightward.
• D) that more investment is crowded out.

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Definitions:

Mutually Exclusive

Events or choices that cannot occur at the same time, requiring a selection to be made between them.

Payback Period

The duration of time it takes for an investment to generate an amount of income or cash equivalent to the cost of the investment, essentially measuring how quickly the investment can be recouped.

Time Value

The concept that money available now is worth more than the same amount in the future due to its potential earning capacity.

Payback Period

The time required for an investment to generate cash flows sufficient to recoup the original investment cost.