A high budget deficit tends to place ____ pressure on interest rates; the Fed's tightening of the money supply tends to place ____ pressure on interest rates.

Question

Quizplus · Accepted Answer

A high budget deficit increases the demand for borrowed funds, which puts upward pressure on interest rates. Similarly, when the Fed tightens the money supply, it reduces the amount of money available for borrowing, which also puts upward pressure on interest rates.

A High Budget Deficit Tends to Place ____ Pressure on Interest