When the federal governments budget deficit increases,the ________ curve for bonds shifts to the ________.
A) demand; right
B) demand; left
C) supply; left
D) supply; right

Question

Quizplus · Accepted Answer

An increase in the federal government's budget deficit leads to an increase in the supply of bonds, as the government must issue more bonds to finance its deficit. As a result, the supply curve for bonds shifts to the right. With an increase in bond supply relative to bond demand, bond prices will decrease, and interest rates will increase. Therefore, the correct answer is D, supply; right.

When the Federal Governments Budget Deficit Increases,the ________ Curve for Bonds