According to the Crowding-Out Effect,what Will Occur If the Federal

question 66

Multiple Choice

According to the crowding-out effect,what will occur if the federal government borrows to finance deficit spending?

• A)The supply of loanable funds will increase, driving interest rates up.
• B)The demand for loanable funds will increase, driving interest rates up.
• C)The supply of loanable funds will decrease, driving interest rates down.
• D)The demand for loanable funds will decrease, driving interest rates down.