If the government’s budget deficit increases while the economy is producing substantially less then potential GDP and expansionary monetary policy is implemented, then any ________________ from government borrowing would be _____________________________ from that monetary policy.
A. higher interest rates; largely offset by the lower interest rates
B. lower interest rates; largely offset by the higher interest rates
C. increase in interest rates; reduced by private sector investment
D. inflationary increase in price level; crowding out private investment
Answer:A
If the government’s budget deficit increases while the economy is producing substantially less then potential GDP and expansionary monetary policy is implemented, then any ________________ from government borrowing would be _____________________________ from that monetary policy.
A. higher interest rates; largely offset by the lower interest rates B. lower interest rates; largely offset by the higher interest rates C. increase in interest rates; reduced by private sector investment D. inflationary increase in price level; crowding out private investment
Explanation: Type: Multiple Choice