Suppose an Economy Is in a Recession and the Government

question 11

Multiple Choice

Suppose an economy is in a recession and the government is experiencing a budget deficit. What will be a possible effect of the government's decision to borrow money in order to increase spending and real GDP?"

• A)The government borrowing will increase the supply of money,causing interest rates to fall and investment spending to be crowded out.
• B)The government borrowing will increase the demand for money,causing interest rates to rise and investment spending to be crowded out.
• C)There will be no effect of government borrowing on investment spending or real GDP.
• D)The government borrowing will increase the demand for money causing interest rates to rise and investment spending to increase.

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Definitions:

Ligaments

Fibrous connective tissues that connect bones to other bones, providing stability and support to joints.

Hyaline Cartilage

A type of cartilage found at the ends of bones, in the nose, and in the trachea, characterized by its glossy, translucent appearance.

Synovial Membrane

A specialized connective tissue lining the inner surface of capsules of synovial joints and tendon sheaths, producing synovial fluid for lubrication.

Osteoblasts

Cells responsible for bone formation, playing a crucial role in the growth, maintenance, and repair of the skeletal system.