Subject - Economics:

Macroeconomics

MCQ - 77-4087

Question:

Suppose a nation is experiencing an annual budget surplus and uses some of this surplus to pay down part of the national debt. One potential side effect of this policy would be

increase interest rates and throw the economy into a recession.
increase interest rates and depreciate the nation’s currency.
decrease interest rates and risk an inflationary period.
increase interest rates and depreciate the nation’s currency.
decrease interest rates and appreciate the nation’s currency.

Correct Answer: C

Explanation:

Reducing debt lowers interest rates, which increases private investment and risks inflation. Lower interest rates decrease foreign investment in the United States. Weaker demand for dollars depreciates the value of the dollar.

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269 MCQ for effective preparation of the test of Macroeconomics of Economics section.

Read the MCQ statement: Suppose a nation is experiencing an annual budget surplus and uses some of this surplus to pay down part of the national debt. One potential side effe .... is policy would be , keenly and apply the method you have learn through the video lessons for Macroeconomics to give the answer. Record your answer and check its correct answer and video explanation for MCQ No. 77-4087.

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Solve the question for MCQ No. and decide which option (A through D/E) is the best choice to answer the MCQ, then click/tap the blue button to view the correct answer and it explanation.

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