If a Budget Deficit Increases Interest Rates, It Is Possible

question 158

Multiple Choice

If a budget deficit increases interest rates, it is possible that investment will

• A)fall, leading to a larger capital stock.
• B)fall, so that there is a smaller capital stock.
• C)rise, because investment is directly related to interest rates.
• D)rise, because investment is more attractive when interest rates are higher.

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Definitions:

River Valleys

Geographical areas formed by the land surrounding a river, often characterized by fertile soil and significant for early human civilizations.

Hydraulic Theory

A theory that suggests the control and management of water resources played a crucial role in the development of early civilizations.

Occupation Site

A location where evidence of past human activity is found, indicating the presence of work, living, or ceremonial spaces.

Hydraulic Theory

A theory suggesting that the development of states in ancient civilizations was closely related to the control of irrigated farming over arid lands.