The federal government's demand for funds is ________, and municipal governments' demand for funds is somewhat ____________.

Question

Quizplus · Accepted Answer

The federal government's demand for funds is largely interest-inelastic because it has a relatively fixed budget and must finance its operations regardless of the interest rate. Municipal governments, on the other hand, may have more flexibility in their spending decisions and may be more sensitive to changes in interest rates. Therefore, their demand for funds is somewhat interest-elastic.

The Federal Government's Demand for Funds Is ________, and Municipal