Question

A perennial debate is whether federal budget deficits lead to higher interest rates. The follow-ing table gives some historical data on deficits and interest rates. For each year, the deficit is the difference between revenues and expenditures measured in current dollars; a negative figure is a deficit, and a positive figure is a surplus.
On the basis of these data, what inference could you make about the relationship between federal deficits and interest rates? Explain why inferences based on these data alone might be problematic.


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  • CreatedMarch 25, 2015
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