Macroeconomics 11th Edition by Michael Parkin

تمرين 21

Government in the Loanable Funds Market
Use the following information to work Problem.
India's Economy Hits the Wall
At the start of 2008, India had an annual growth of 9%, huge consumer demand, and increasing foreign investment. But by July 2008, India had 11.4% inflation, large government deficits, and rising interest rates. Economic growth is expected to fall to 7% by the end of 2008. A Goldman Sachs report suggests that India needs to lower the government's deficit, raise educational achievement, control inflation, and liberalize its financial markets.
With economic growth forecasted to slow, future incomes are expected to fall. If other things remain the same, how will the demand or supply of loanable funds in India change?