Some Economists Argue That a Rise in the Interest Rate,brought

question 150

Multiple Choice

Some economists argue that a rise in the interest rate,brought about by a rise in government borrowing in the loanable funds market to finance a budget deficit,brings in foreign funds in search of the higher interest rate return.This,in turn,dampens the rise in the interest rate.If this is true as far as it goes,there will be __________ crowding out than there would be if foreign funds did not flow into the country.

• A) more
• B) less
• C) the same amount of
• D) none of the above

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Definitions:

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