The federal government's spending policies are generally thought to be _________ interest rates, but municipal governments' spending is somewhat ________ interest rates.
A)independent of; sensitive to
B)sensitive to; independent of
C)inversely rated to; positively related to
D)positively related to; inversely related to

Question

The federal government's spending policies are generally thought to be _________ interest rates, but municipal governments' spending is somewhat ________ interest rates. ​
A)independent of; sensitive to
B)sensitive to; independent of
C)inversely rated to; positively related to
D)positively related to; inversely related to

Quizplus · Accepted Answer

Federal government spending is typically independent of interest rates because it can finance deficits through borrowing. Municipal governments, however, are more sensitive to interest rates as they often rely on bonds for funding, which are affected by interest rate changes.

The Federal Government's Spending Policies Are Generally Thought to Be