Government Borrowing and Interest Rates. What is the likely impact of increased government borrowing on market rates of interest?
As the government borrows more money: (Select the best answer below.)
A. it is an increase in overall money demand, which puts downward pressure on interest rates, all else equal.
B. it is an increase in overall money demand, which does not impact interest rates.
C. it is an increase in overall money demand, which puts upward pressure on interest rates, all else equal.
D. it is an decrease in overall money demand, which puts upward pressure on interest rates, all else equal.
