Question
5. Impact of budget deficits The following graph shows the loanable funds market in the United States. It plots both the demand (D) for loanable
5. Impact of budget deficits
The following graph shows the loanable funds market in the United States. It plots both the demand (D) for loanable funds and the supply (S) of loanable funds. At the current equilibrium, the government is operating with a balanced budget. Assume now that concerns regarding resources available to public educators lead the government to increase education spending without raising taxes, causing a budget deficit.
Show the effect of the budget deficit on the market for loanable funds by shifting the demand (D) curve, the supply (S) curve, or both.
INTEREST RATE LOANABLE FUNDS S D D S (?)
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Microeconomics A Contemporary Introduction
Authors: William A. McEachern
9th edition
978-0538453714, 538453710, 978-1111415921
