Question

If the government increases its borrowing, then at every interest rate there is a(n) _____ funds. additional demand for increase in the supply of additional supply of decrease in the supply of

Answer 1

Answer: additional demand for funds.

Explanation: If there is an increase in borrowing by the government, this means that at every interest rate, the government makes additional demand for funds.

A lot of reasons can be attributed to an increase in government's borrowing. Government may borrow as a way to pay back existing loans or provision of infrastructure such as schools, roads, hospitals for its people. In a case when government's borrowing rises, the government will demand for money at different interest rates.