Refer to the figure below, which depicts a closed economy?s saving, government budget deficit, and planned investment functions. Interest rate 8 6 2 O 100 200 300 400 Interest rate $ billions 4 2 O 100 200 300 400 Interest rate 8 $ billions 6 4 2 O Which of the following is least likely to be correct? 100 200 300 400 $ billions If the interest rate rises, then the line in the left graph will shift to the left. The economy?s demand for loanable funds is obtained by horizontally summing the lines in the left and centre graphs. The middle graph depicts the government budget deficit function. The equilibrium quantity of loanable funds is $300 billion.
Refer to the figure below, which depicts a closed economy?s saving, government budget deficit, and planned investment functions. Interest rate 8 6 2 O 100 200 300 400 Interest rate $ billions 4 2 O 100 200 300 400 Interest rate 8 $ billions 6 4 2 O Which of the following is least likely to be correct? 100 200 300 400 $ billions If the interest rate rises, then the line in the left graph will shift to the left. The economy?s demand for loanable funds is obtained by horizontally summing the lines in the left and centre graphs. The middle graph depicts the government budget deficit function. The equilibrium quantity of loanable funds is $300 billion.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter31: The Impacts Of Government Borrowing
Section: Chapter Questions
Problem 3SCQ: In the late 1990s, the U.S. government moved from a budget deficit to a budget surplus and the trade...
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