A Government Reduces Its Budget Deficit,but at the Same Time

question 16

Multiple Choice

A government reduces its budget deficit,but at the same time people become concerned that the outlook for future government expenditures and revenues increase the chance it will default.Which of the following is correct?

• A)The reduced budget deficit will raise interest rates in general.The increased risk of default will raise interest rates on government bonds.
• B)The reduced budget deficit will raise interest rates in general.The increased risk of default will reduce interest rates on government bonds.
• C)The reduced budget deficit will reduce interest rates in general.The increased risk of default will raise interest rates on government bonds.
• D)The reduced budget deficit will reduce interest rates in general.The increased risk of default will reduce interest rates on government bonds.

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Definitions:

Stimuli

External or internal changes that affect the senses and can elicit responses from an organism.

Cerebral Asymmetry

The anatomical, functional, and physiological differences between the two hemispheres of the brain.

Mirror Neurons

Mirror neurons are neurons that fire both when performing an action and when observing the same action performed by another, playing a role in learning, imitation, and empathy.

Cerebral Asymmetry

The phenomenon where the two hemispheres of the brain have differing functions, sizes, or activities.