Suppose That in an Attempt to Increase Employment, the Government

Multiple Choice

Suppose that in an attempt to increase employment, the government increases spending and runs a deficit. As a result of this deficit there is an increase in interest rates. This deficit was most likely financed by:

A) an increase in marginal tax rates.
B) the Treasury selling securities to the Federal Reserve.
C) the Federal Reserve selling securities to commercial banks.
D) the Treasury selling bonds to firms and households.