In the mid-1990s, real interest rates fell in the United States.This was the result of budget deficit

Question

Quizplus · Accepted Answer

Reductions in budget deficits lead to a decrease in demand for borrowing, which leads to lower interest rates. Looser monetary policy also contributes to lower interest rates by increasing the money supply and reducing the cost of borrowing. Therefore, the combination of reductions in budget deficits and looser monetary policy resulted in lower real interest rates in the mid-1990s.

In the Mid-1990s, Real Interest Rates Fell in the United