2) The government

a. sets most interest rates.

b. is a net lender (or supplier of loanable funds).

c. is a net borrower (or demander of loanable funds).

d. determines the "federal risk premium" portion of commercial interest rates

C). Is a net borrower (or demander of loanable funds).

Explanation:

The government is a net borrower as it borrows much more than it or revenue or savings which makes it finance a fiscal deficit or current account deficit almost every year. The government is a net borrower as it works for the welfare of its citizens and not for profits. However, this has to be in controlled as excess borrowing may weaken the authority. It is calculated after subtracting total expenditure for the year from the revenue generated by all the sources. Thus, option C (net borrower) is the correct answer.