A federal budget deficit can strain credit markets, forcing the real rate of interest to decrease. True False

False

Explanation:

When the federal government has a budget deficit, it needs to borrow money to continue operating. It borrows money from the market, i.e. sells securities. This results in the crowding out effect since the funds used by the federal government cannot be used by private investors to finance private projects. Since the FED competes with private entities for available money, this with cause the real price of money, or the real interest rate, to increase.

answer about 4-5 percent of the labor force is unemployed;