The table sets out the data for an economy when thegovernment's budget is balanced.

If thegovernment's budget becomes a deficit of $1.0 billion, what are the real interest rate andinvestment?

Does crowding outoccur?

If thegovernment's budget becomes a deficit of $1.0 billion, the real interest rate is

nothing

percent a year and the quantity of investment is $

nothing

billion.

>>> Answer to 1 decimal place.

Real

interest rate

(percent

peryear) Loanable funds demanded Loanable funds supplied

(billions of 2007dollars)

4 8.0 5.0

5 7.5 5.5

6 7.0 6.0

7 6.5 6.5

8 6.0 7.0

9 5.5 7.5

10 5.0 8.0