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Macroeconomics: 2007 Recession


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.


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


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


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


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.