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.
c
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Refer to Figure 15-15. Why won't regulators require that Erickson Power produce the economically efficient output level?
A) because at the economically efficient output level, the marginal cost of producing the last unit sold exceeds the consumers' marginal value for that last unit B) because Erickson Power will earn zero profit C) because there is insufficient demand at that output level D) because Erickson Power will sustain persistent losses and will not continue in business in the long run
Output supply is increasing in the interest rate because
A) labor demand is increasing in the interest rate. B) labor demand is decreasing in the interest rate. C) labor supply is increasing in the interest rate. D) labor supply is decreasing in the interest rate.
If a cigarette manufacturer sells its cigarettes to a distributor and contractually restricts the distributor from reselling the cigarettes outside the state of New York, this is an example of ________.
A) a tying arrangement B) territorial confinement C) a requirements contract D) exclusive dealing
Which of the following statements about Social Security is FALSE?
A) Social Security is an intergenerational transfer where the benefits paid are only roughly related to past earnings. B) Over 90 percent of all employed workers in the United States are covered by Social Security. C) Benefit payments under Social Security are based on the recipient's need. D) Benefit payments under Social Security redistribute income from young to old.