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Macroeconomics

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Macroeconomics: 2007 Recession

MACRO-1ISLYJ

The Obama stimulus plan of 2009 led to an additional $800 billion dollars of federal deficit. Which of the following statements about the funding of this deficit is true.

A

The needed borrowing of these funds led to falling interest rates, falling bond prices, and the crowding out of private sector investment.

B

The U.S. government printed money to fund this deficit which resulted in significant inflation.

C

The deficit led to significantly higher interest rates and significantly lower bond prices.

D

Much of this increased demand for loanable funds, as a result of this deficit, was supported by increased foreign savings; there was little upward pressure on interest rates.