Which of the following is NOT a reason that interest rates remained low despite high budget deficits following the financial crisis?
A)increased demand for U.S. government bonds
B)the perceived riskiness of alternative investments such as stocks
C)low interest rates on CDs and similar short-term assets
D)increases in expected inflation

Question

Quizplus · Accepted Answer

Increases in expected inflation would typically lead to higher interest rates, not lower ones. Therefore, D is the option that is not a reason why interest rates remained low despite high budget deficits following the financial crisis. A, B, and C are all valid reasons why interest rates may have remained low.

Which of the Following Is NOT a Reason That Interest