Which statement is a major consequence of high government budget deficits? O All else held constant, high budget deficits financed by borrowing will lead to lower interest rates. Budget deficits cause unemployment as firms relocate to countries with balanced budgets. If the government finances the deficit by borrowing money, it can crowd out business investment Printing money to finance the deficit can lead to a significantly deflationary environment.

Question

Warren Meyers

Business

28 July, 01:51

Which statement is a major consequence of high government budget deficits? O All else held constant, high budget deficits financed by borrowing will lead to lower interest rates. Budget deficits cause unemployment as firms relocate to countries with balanced budgets. If the government finances the deficit by borrowing money, it can crowd out business investment Printing money to finance the deficit can lead to a significantly deflationary environment.

+3

Answers (1)

Know the Answer?

Jeremy Harris · Answer 1

If the government has a budget deficit, crowding out might occur. Crowding out leads to all of the following; a higher real interest rate, a smaller capital stock in the future and a decreased quantity of investment. Borrowing from the rest of the world Government budget surpluses, private saving.