One Mechanism Through Which Increasing Public Debt May Impact the Economy

question 11

Multiple Choice

One mechanism through which increasing public debt may impact the economy is that the resulting

• A) increased competition for funds increases interest rates and causes a reduction in investment.
• B) increased competition for funds decreases interest rates and causes an increase in investment.
• C) decreased competition for funds decreases interest rates and causes a reduction in investment.
• D) decreased competition for funds decreases interest rates and causes an increase in investment.