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