If the government adopts an expansionary fiscal policy that requires more government borrowing in the money market, then interest rates are likely to:

Question

Quizplus · Accepted Answer

When the government borrows more in the money market, it increases the demand for funds, which typically leads to higher interest rates. Higher interest rates can partially offset the effects of expansionary fiscal policy by making borrowing more expensive for businesses and consumers, potentially reducing private investment and consumption.

If the Government Adopts an Expansionary Fiscal Policy That Requires