Question #35

Higher government deficits may drive up interest rates if bond markets begin to get short of funds. This statement is false

• because the supply of treasury securities offered by the federal government is always equal to the newly created funds from the deficit.
• because in modern monetary theory the government does not have a financial constraint.
• because interest rates are set in the private market and government debt has no real risk.

Answer #302

Answer: because the supply of treasury securities offered by the federal government is always equal to the newly created funds from the deficit.

Explanation

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