If the Treasury Uses a Relatively Large Proportion of ____

question 42

Multiple Choice

If the Treasury uses a relatively large proportion of ____ debt to finance the deficit, this may place upward pressure on ____ interest rates, and corporations may reduce their investment in fixed assets.

• A)long-term; long-term
• B)long-term; short-term
• C)short-term; long-term
• D)B and C

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Definitions:

Substitution Effect

The alteration in buying habits caused by shifts in relative prices, prompting consumers to swap out higher-priced goods for more affordable options.

Output Effect

The change in total revenue resulting from selling more units of a product, potentially influenced by changes in price or quantity produced.

Substitute Resource

Alternative resources or inputs that can be used in place of another in the production process to produce a similar type of output.

Productivity

The efficiency with which input resources are converted into outputs, often measured as the ratio of output to input in a given time period.