When There Are Credit-Market Imperfections,an Increase in Government Debt May

question 13

Multiple Choice

When there are credit-market imperfections,an increase in government debt may be advantageous because it

• A) discourages credit-constrained consumers from borrowing too much.
• B) allows credit-constrained consumers to borrow more.
• C) eliminates the problems that cause credit-market imperfections.
• D) encourages more private saving.

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Definitions:

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