If the Treasury uses a relatively large proportion of ____ debt to finance the deficit, this may place upward pressure on ____ interest rates, and corporations may reduce their investment in fixed assets.
A)long-term; long-term
B)long-term; short-term
C)short-term; long-term
D)B and C

Question

Quizplus · Accepted Answer

Issuing a large proportion of long-term debt can increase long-term interest rates, as it may signal higher future borrowing costs or inflation expectations, leading corporations to reduce investment in fixed assets.

If the Treasury Uses a Relatively Large Proportion of ____