When the Government Runs Deficit, It Causes the Cost of Borrowing

question 28

Multiple Choice

When the government runs deficit, it causes the cost of borrowing to:

• A) increase, which decreases private demand for loanable funds.
• B) decrease, which decreases private demand for loanable funds.
• C) increase, which increases private demand for loanable funds.
• D) decrease, which increases private demand for loanable funds.

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Definitions:

Warranty

A guarantee, typically provided by a manufacturer, promising to repair or replace a product if it fails within a specified period.

Maximum Load

The highest amount of stress, weight, or pressure that can be safely applied or carried by a structure or device.

Negative Words

Negative words are words that convey a negative connotation, often used to express criticism, pessimism, or a lack of confidence.

Reader's Resistance

The skepticism or opposition that a writer anticipates and aims to overcome in the audience during communication or argument.