Describe why scenario is likely to be bad for macroeconomy

Reference no: EM131482963

Question: Assume the federal government runs huge budget deficits today to finance, say, Social Security, Medicare, and other programs for the elderly, and finances these deficits by selling bonds that raises interest rates. Since business often borrows money to invest, and interest is the cost of borrowing, these higher interest rates will reduce investment. Describe why this scenario is likely to be bad for the macroeconomy.

Reference no: EM131482963

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