All of the following scenarios are associated with government budget deficits EXCEPT that:

Question

Quizplus · Accepted Answer

Government budget deficits require borrowing, which increases the demand for loanable funds and puts upward pressure on interest rates. This can lead to crowding out of private investment spending as borrowing becomes more expensive. However, deficits do not lead to a decrease in the total amount of borrowing, as the government is borrowing more to finance its spending.

All of the Following Scenarios Are Associated with Government Budget