1. The impact of a budget deficit is:
A. An increase in the quantity of loanable funds exchanged and an increase in the interest rate
B. An increase in the quantity of loanable funds exchanged and a decrease in the interest rate
C. A decrease in the quantity of loanable funds exchanged and an increase in the interest rate
D. A decrease in the quantity of loanable funds exchanged and a decrease in the interest rate
2. A bond:
A. Represents partial ownership of a company
B. Usually pays higher interest the shorter its term
C. Represents a direct relationship between savers and investors
D. Has no credit risk
3. State and local governments issue ____ bonds that offer tax advantages, so they typically have _____ interest rates than bonds issued by the federal government and corporations.
A. Junk; higher
B. Municipal; lower
C. Mutual; higher
D. Default; lower