Which one of the following statements concerning interest rates is correct?
A) A decrease in the money supply will cause interest rates to decline.
B) A federal budget surplus will cause interest rates to decline.
C) Economic expansions will cause interest rates to decline.
D) Rising interest rates in foreign countries will cause U.S. interest rates to decline.

Question

Quizplus · Accepted Answer

A federal budget surplus can lead to lower interest rates because when the government spends less than it earns, it reduces the need to borrow in the financial markets, potentially lowering demand for credit and thus interest rates.

Which One of the Following Statements Concerning Interest Rates Is