35) 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. The reduced budget deficit will raise interest rates in general. The increased risk of default will raise interest rates on government bonds. a. The reduced budget deficit will raise interest rates in general. The increased risk of default will reduce interest rates on government bonds. The reduced budget deficit will reduce interest rates in general. The increased risk of default will raise interest rates on government bonds. The reduced budget deficit will reduce interest rates in general. The increased risk of default will reduce interest rates on government bonds. b. C. d.

35) 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. The reduced budget deficit will raise interest rates in general. The increased risk of default will raise interest rates on government bonds. a. The reduced budget deficit will raise interest rates in general. The increased risk of default will reduce interest rates on government bonds. The reduced budget deficit will reduce interest rates in general. The increased risk of default will raise interest rates on government bonds. The reduced budget deficit will reduce interest rates in general. The increased risk of default will reduce interest rates on government bonds. b. C. d.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter31: The Impacts Of Government Borrowing

Section: Chapter Questions

Problem 29P: During the most recent recession, some economists argued that the change in the interest rates that...

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