If the government borrows funds, it “crowds out” private investment. This causes the interest rate (the price of investment) to increase. The interest rate increases because:
A. The government has increased the supply of funds.
B. The government has decreased the demand of funds.
C. The government sets interest rates
D. The government has increased the demand for funds
E. The government has decreased the supply of funds
1 answer
D. The government has increased the demand for funds
0 answers