Other Things Being Equal, What Is the Effect of Deficit

question 52

Multiple Choice

Other things being equal, what is the effect of deficit spending on interest rates?

• A)Interest rates decline.
• B)Interest rates rise.
• C)Interest rates hold constant because the demand for credit decreases.
• D)There is no impact unless the Federal Reserve decides to alter the money supply.

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Definitions:

Manifest Destiny

The 19th-century doctrine or belief that expansion of the US throughout the American continents was both justified and inevitable.

Mexican War

A conflict between the United States and Mexico from 1846 to 1848, resulting in the U.S. acquisition of territories in what are now the states of California, Nevada, Utah, Arizona, and New Mexico.

Expansionist Fervor

The passionate enthusiasm or zeal for territorial or economic growth of a nation, often through colonization or conquest.

Treaty of Guadalupe Hidalgo

The 1848 agreement that ended the Mexican-American War, with Mexico ceding large territories to the United States, including what are now California, Nevada, and Utah, among others.