When There Are Credit Market Imperfections, an Increase in Government

Multiple Choice

When there are credit market imperfections, an increase in government debt may be advantageous because it

A) discourages credit-constrained consumers from borrowing too much.
B) increases the welfare of credit-constrained consumers.
C) eliminates the problems that cause credit market imperfections.
D) encourages more private saving.
E) borrows at higher interest rates than consumers.