You are required to testify before Parliament concerning the effects of an increase in the government surplus. What is the best thing for you to say?
A) The debt and interest rates will rise.
B) The debt and interest rates will fall.
C) The debt will rise, and interest rates will fall.
D) The debt will fall, and interest rates will rise.

Question

Quizplus · Accepted Answer

An increase in the government surplus implies that the government is earning more in revenue than it is spending. This would lead to a reduction in the need for borrowing, thereby reducing the debt. Lower borrowing needs can also lead to lower interest rates as the demand for funds decreases.

You Are Required to Testify Before Parliament Concerning the Effects