Which statement is a major consequence of high government budget deficits? o all else held constant, high budget deficits financed by borrowing will lead to lower interest rates. budget deficits cause unemployment as firms relocate to countries with balanced budgets. if the government finances the deficit by borrowing money, it can crowd out business investment printing money to finance the deficit can lead to a significantly deflationary environment.

Which of the following statements is correct? stockholders should generally be happier than bondholders to have managers invest in risky projects with high potential returns as opposed to safe projects with lower expected returns. potential conflicts between stockholders and bondholders are increased if a firm's bonds are convertible into its common stock. takeovers are most likely to be attempted if the target firm’s stock price is above its intrinsic value. one advantage of operating a business as a corporation is that stockholders can deduct their pro rata share of the taxes the firm pays, thereby eliminating the double taxation investors would face in a partnership.