When There Are Credit-Market Imperfections, an Increase in Government Debt

question 18

Multiple Choice

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

• A)discourages credit-constrained consumers from borrowing too much.
• B)eliminates the problems that cause credit-market imperfections.
• C)encourages more private saving.
• D)allows credit-constrained consumers to borrow more.

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Definitions:

Covertly

Done in a hidden or concealed manner.

Directly Confronting

A communication approach where issues or conflicts are addressed openly and straightforwardly.

Alternative View

Considering or presenting a different perspective or approach to understanding a situation, problem, or concept.

Impaired Reality Testing

A psychological condition where an individual has difficulty distinguishing between what is real and what is not, often seen in psychotic disorders.