In fiscal year 2001,the U.S.government ran a surplus of about $127 billion.In fiscal year 2002,the government ran a deficit of $159 billion.Other things the same,this change would be expected to have

Question

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A government deficit means that the government is borrowing more money than it is taking in through taxes. This will increase demand for loans in the market and cause interest rates to rise as lenders try to attract more borrowers. Higher interest rates make it more expensive to borrow money for investment purposes, so investment is expected to decrease. Therefore, the correct choice is D - increased interest rates and decreased investment.

In Fiscal Year 2001,the U