Suppose the government borrows $20 billion more next year than this year. The following graph shows the market for loanable funds before the additional borrowing for next year. Use the orange line (square point) to graph the new supply of loanable funds as a result of this government policy to borrow $20 billion more next year than this year. 10 Domand Supply New Supply 7 5 Interest Rate (Percent) 3 20 1 0 0 10 90 100 -20 30 40 50 00 TO 10 Loanable Funds (Billions of dollars) As a result of this policy, the equilibrium interest rate Which of the following statements accurately describe the effect of the increase in government borrowing? Check all that apply. Private saving decreases by less than $20 billion. National saving decreases by more than $20 billion. Public saving decreases by exactly $20 billion Investment decreases by less than $20 billion The more elastic the supply of loanable Funds, the is the change in national saving as a result of the increase in government borrowing, The more elastic the demand for loanable funds, the the change in national saving as a result of the increase in government borrowing, Suppose households belleve that greater government borrowing today imples higher taxes to pay off the government debt in the future. today, which would the supply of loanable funds. This This belief would cause people to save private saving and the effect of the reduction in public saving on the market for loanable funds. would