Assume the economy is closed and that it is operating at full employment. Which statement is true when the the size of the budget deficit decreases? Part 2 A. The interest rate will decrease, leading to an increase in investment and capital formation. B. A reduction in the growth of productivity, and a reduction in society's standard of living will occur. C. Demand and supply of credit will increase. D. The increased amount of public goods will crowd out privately produced goods