According to the model developed in Chapter 3, when government spending increases but taxes are not raised, interest rates:
A) increase.
B) are unchanged.
C) decrease.
D) can vary.

Question

Quizplus · Accepted Answer

When government spending increases but taxes are not raised, it typically leads to higher demand for funds, which can cause interest rates to increase as per the loanable funds theory.

According to the Model Developed in Chapter 3, When Government