The impact of a budget deficit

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Reference no: EM13815086

1. The impact of a budget deficit is:

A. An increase in the quantity of loanable funds exchanged and an increase in the interest rate

B. An increase in the quantity of loanable funds exchanged and a decrease in the interest rate

C. A decrease in the quantity of loanable funds exchanged and an increase in the interest rate

D. A decrease in the quantity of loanable funds exchanged and a decrease in the interest rate

2. A bond:

A. Represents partial ownership of a company

B. Usually pays higher interest the shorter its term

C. Represents a direct relationship between savers and investors

D. Has no credit risk

3. State and local governments issue ____ bonds that offer tax advantages, so they typically have _____ interest rates than bonds issued by the federal government and corporations.

A. Junk; higher

B. Municipal; lower

C. Mutual; higher

D. Default; lower

Reference no: EM13815086

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