Which statement is a major consequence of high government budget deficits? a) All else held constant, high budget deficits financed by borrowing will lead to lower interest rates. b) If the government finances the deficit by borrowing money, it can crowd out business investment. c) Budget deficits cause unemployment as firms relocate to countries with balanced budgets. d) Printing money to finance the deficit can lead to a significantly deflationary environment.
Which statement is a major consequence of high government budget deficits? a) All else held constant, high budget deficits financed by borrowing will lead to lower interest rates. b) If the government finances the deficit by borrowing money, it can crowd out business investment. c) Budget deficits cause unemployment as firms relocate to countries with balanced budgets. d) Printing money to finance the deficit can lead to a significantly deflationary environment.
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter18: Debates In Macroeconomics Over The Role And Effects Of Government
Section: Chapter Questions
Problem 11QP
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Which statement is a major consequence of high government budget deficits?
a) All else held constant, high budget deficits financed by borrowing will lead to lower interest rates.
b) If the government finances the deficit by borrowing money, it can crowd out business investment.
c) Budget deficits cause unemployment as firms relocate to countries with balanced budgets.
d) Printing money to finance the deficit can lead to a significantly deflationary environment.
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