The crowding-out effect implies that a government budget deficit ...

[altibaby]

The crowding-out effect implies that a government budget deficit ________ the demand for loanable funds and ________ equilibrium investment.
 
  A) increases; decreases
  B) does not change; does not change
  C) increases; increases
  D) decreases; decreases
  E) decreases; increases

Question 2

If the Fed buys U.S. government securities,
 
  A) the discount rate will fall.
  B) bank reserves will decrease.
  C) the discount rate will rise.
  D) the federal funds rate will fall.
  E) the federal funds rate will rise.

[jaaaaaaa]

Answer to Question 1

A

Answer to Question 2

D