Refer to Table 23.3.2. The table shows an economy's demand for loanable funds and supply of loanable funds schedules when the government's budget is balanced. The quantity of loanable funds demanded increases by $1 trillion at each real interest rate and the quantity of loanable funds supplied increases by $2 trillion at each real interest rate. If the government wants investment to be $9 trillion, it must ________ its budget balance by ________ trillion.

A) increase; $1

B) decrease; $1

C) increase; $1.5

D) decrease; $1.5

E) increase; $2

Answer:A

Diff: 2Type: MC

Topic:Government in the Market for Loanable Funds

Source:MyEconLab

why A?

Refer to the table below to answer the following question. Table 23.3.2 Loanable funds Loanable funds Real demanded supplied interest rate (trillions of 2002 (trillions of 2002 (percent per year) dollars) dollars) 8.5 5.5 8.0 6.0 7.5 6.5 7.0 7.0 6.5 7.5 6.0 8.0 10 5.5 8.5