Suppose the Government Deficit Increases,but the Interest Rate Remains the Same.Which

question 31

Multiple Choice

Suppose the government deficit increases,but the interest rate remains the same.Which of the following things might have happened simultaneously to keep interest rates the same?

• A)The government reduces the amount that people may put into savings accounts on which the interest is tax exempt.
• B)Because they are optimistic about the future of the economy,firms desire to borrow more to purchase physical capital.
• C)Consumers decide to decrease consumption and work more.
• D)All of the above could explain why the interest rate would be unchanged.

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Definitions:

Stephen Douglas

A 19th-century American politician from Illinois known for his debates with Abraham Lincoln and advocacy for popular sovereignty in determining states' positions on slavery.

Lincoln-Douglas Debates

Series of senatorial campaign debates in 1858 focusing on the issue of slavery in the territories; held in Illinois between Republican Abraham Lincoln, who made a national reputation for himself, and incumbent Democratic senator Stephen A. Douglas, who managed to hold on to his seat.

Dred Scott V. Sanford

An 1857 U.S. Supreme Court decision that ruled African Americans were not U.S. citizens and that Congress had no authority to prohibit slavery in federal territories, exacerbating sectional tensions that led to the Civil War.