If households increase their saving at the same time that the government increases its deficit,
A)the demand and supply curves for bonds will be unaffected.
B)the demand curve for bonds will shift to the left.
C)the supply curve for bonds will shift to the right.
D)the equilibrium interest rate will definitely rise.

Question

Quizplus · Accepted Answer

When the government increases its deficit, it typically issues more bonds to finance the deficit, shifting the supply curve for bonds to the right.

If Households Increase Their Saving at the Same Time That