If the federal government borrows from households to pay for increased budget deficits, this will cause

Question

Quizplus · Accepted Answer

When the federal government borrows from households to pay for increased budget deficits, it means that households are lending money to the government, which reduces the amount of money available for other investments such as stocks, bonds or mutual funds. Thus, this leads to a decrease in planned investments. Additionally, since households have less money to spend on goods and services, their planned consumption will also decrease. Therefore, option A is the correct answer.

If the Federal Government Borrows from Households to Pay for Increased