When There Are Credit Market Imperfections, an Increase in Government

question 24

Multiple Choice

When there are credit market imperfections, an increase in government debt may be advantageous because it

• A)borrows at higher interest rates than consumers.
• B)discourages credit-constrained consumers from borrowing too much.
• C)encourages more private saving.
• D)eliminates the problems that cause credit market imperfections.
• E)increases the welfare of credit-constrained consumers.

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Definitions:

Thigh

The part of the human leg between the hip and the knee.

Pelvis

The lower part of the torso, enclosed by the pelvic bones and containing the reproductive organs and part of the digestive tract.

Superior Vena Cava

Large but short vein that carries deoxygenated blood from the upper half of the body to the heart’s right atrium.

Inferior Vena Cava

A large vein that carries deoxygenated blood from the lower and middle body into the heart's right atrium.