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:

Diaphysis

The shaft or central part of a long bone.

Endosteum

The thin vascular membrane of connective tissue that lines the inner surface of bony tissue, involved in bone growth and healing.

Periosteum

The membrane that surrounds the diaphysis of a bone.

Osteosarcoma

A type of cancer that originates in bone cells and is most commonly found in the long bones near growth plates.