Selling Treasury bonds to finance a federal deficit crowds out private investment by driving
Jinterest rates down.

Question

Quizplus · Accepted Answer

Selling Treasury bonds to finance a federal deficit does not necessarily crowd out private investment by driving interest rates down. In fact, it can have the opposite effect of increasing interest rates if investors demand higher returns to compensate for the perceived risk of investing in a government with a large deficit. Additionally, the impact on interest rates depends on factors such as the size of the deficit, the demand for Treasury bonds, and the state of the economy.

Selling Treasury Bonds to Finance a Federal Deficit Crowds Out