Some Economists Argue That a Rise in the Interest Rate,brought

question 132

Multiple Choice

Some economists argue that a rise in the interest rate,brought about by a rise in government borrowing in the loanable funds market to finance the deficit,brings in foreign funds in search of the higher interest rate return.This,in turn,dampens the rise in the interest rate.If this is true as far as it goes,there will be __________ crowding out than there would be if foreign funds did not flow into the country.

• A) more
• B) less
• C) the same amount of
• D) none of the above

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