Part of the argument against deficits is that they
A)increase interest rates and investment.
B)increase interest rates and decrease investment.
C)decrease interest rates and investment.
D)decrease interest rates and increase investment.

Question

Quizplus · Accepted Answer

Deficits can lead to higher interest rates because the government borrows more, competing with the private sector for funds. Higher interest rates can then decrease investment by making borrowing more expensive for businesses.

Part of the Argument Against Deficits Is That They