If the government budget deficit increases, the

Name: If the government budget deficit increases, the
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Question

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When the government budget deficit increases, it means that the government is spending more money than it is taking in through taxes. This increases the demand for loans, as the government needs to borrow money to cover its expenses. As a result, the equilibrium interest rate increases in order to balance the increased demand for loans. Option D accurately reflects this relationship.

If the Government Budget Deficit Increases, the