If the Federal Government Borrows from the Private Sector to Pay

question 9

Multiple Choice

If the federal government borrows from the private sector to pay for increased budget deficits and interest rates increase, this will cause

• A)a decrease in planned investment and planned consumption.
• B)an increase in planned investment and planned consumption.
• C)a decrease in planned investment and an increase in planned consumption.
• D)an increase in planned investment and a decrease in planned consumption.

---

Definitions:

Flexible Budget

A budget that varies or adapts based on fluctuations in activity or volume levels.

Indirect Materials Cost

The cost of materials used in the production process that cannot be directly traced to the product, such as lubricants and cleaning supplies.

Machine-Hours

A measure of production output or used capacity based on the number of hours machines are operated.

Spending Variance

The difference between the actual amount spent and the budgeted amount for a particular period, used in budget control and analysis.