Figure 29-1 -Refer to Figure 29-1. Suppose That the U.S. Government Deficit

Multiple Choice

Figure 29-1
-Refer to Figure 29-1. Suppose that the U.S. government deficit decreases, causing interest rates in the United States to fall relative to those in the European Union. Assuming all else remains constant, how would this be represented?

A) Supply would decrease, demand would increase and the economy moves from A to D to C.
B) Demand would decrease and the economy moves from B to A.
C) Demand would increase and the economy moves from A to B.
D) Supply would increase, demand would increase and the economy moves from D to A to B.