Explain the implications of the national debt's projected trend on the economy. A. The increasing national debt could force interest rates to rise. The cost of borrowing increases for governments, businesses, and households from the decreased value of the dollar. B. The increasing national debt could force lower interest rates and lower inflation because there is less demand for investors buying the debt. This could result in deflation. C. The lower national debt will help keep interest rates and inflation low. The cost of borrowing decreases for governments, businesses, and households, helping to spur the economy. D. The national debt is neither expanding nor contracting. The government can maintain low interest rates and inflation with a balanced budget, sustaining strong economic growth.
Explain the implications of the national debt's projected trend on the economy. A. The increasing national debt could force interest rates to rise. The cost of borrowing increases for governments, businesses, and households from the decreased value of the dollar. B. The increasing national debt could force lower interest rates and lower inflation because there is less demand for investors buying the debt. This could result in deflation. C. The lower national debt will help keep interest rates and inflation low. The cost of borrowing decreases for governments, businesses, and households, helping to spur the economy. D. The national debt is neither expanding nor contracting. The government can maintain low interest rates and inflation with a balanced budget, sustaining strong economic growth.
Chapter11: Fiscal Policy And The Federal Budget
Section: Chapter Questions
Problem 24QP
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Explain the implications of the national debt's projected trend on the economy.
A. The increasing national debt could force interest rates to rise. The cost of borrowing increases for governments, businesses, and households from the decreased value of the dollar.
B. The increasing national debt could force lower interest rates and lower inflation because there is less demand for investors buying the debt. This could result in deflation.
C. The lower national debt will help keep interest rates and inflation low. The cost of borrowing decreases for governments, businesses, and households, helping to spur the economy.
D. The national debt is neither expanding nor contracting. The government can maintain low interest rates and inflation with a balanced budget, sustaining strong economic growth .
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