In the Example with Credit Market Imperfections in General Equilibrium

question 25

Multiple Choice

In the example with credit market imperfections in general equilibrium

• A)An increase in government debt lowers the market interest rate.
• B)An increase in government debt increases economic welfare for everyone.
• C)An increase in government debt is a Pareto improvement.
• D)An increase in government debt increases economic welfare for borrowers and reduces welfare for lenders.
• E)An increase in government debt decreases economic welfare for everyone.

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