If There Is an Increase in Government Borrowing but There

question 60

Multiple Choice

If there is an increase in government borrowing but there are even larger increases in capital inflows and the supply of loanable funds, then interest rates

• A)may increase.
• B)may decrease.
• C)may remain unchanged.
• D)None of the above is correct.

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Definitions:

Complete certainty

A state or condition where all aspects and outcomes are known, with no ambiguity or risk.

Classical decision

A decision-making approach based on rational analysis and choice, often associated with maximizing outcomes using a clear set of preferences and information.

Behavioral decision

Decisions made based on the observation and understanding of the behavior of individuals or groups, often in the context of behavioral economics or psychology.

Uncertain environments

describe situations or contexts in which there is a lack of clear information or predictability, making it difficult to make decisions or plan effectively.