Other things equal, an increase in the government budget deficit Group of answer choices drives the interest rate up. drives the interest rate down. might not have any effect on interest rates. increases business prospects.

The budget deficit is the situation in the budgetary control system which indicates that the expenses exceeds revenues for a particular period. It is the alarming situation for the government to change their debts and business operations.

An increase in the budget deficit will "drives the interest rate up"

Reason:

Usually when there is a situation of deficit in the budget of the government then the government start borrowing money from creditors.

These creditors are generally under the doubtful position for the ability of the government for the repayment of the debts.

This phenomenon and attitude of the creditors generally increases the interest rates.

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drives the interest rate up.

Explanation:

A budget deficit is the amount by which spending exceeds income.

Other things equal, an increase in the government budget deficit drives the interest rate up.

Generally, when there's a deficit in government budget, they resort to borrowing money from creditors. This creditors are likely to be sceptical about the government's ability to repay the debt and at such would increase the interest rate.

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