A decrease in the government budget deficit decreases the loanable funds and an increase in the government budget surplus increases the loanable funds.

Question

Quizplus · Accepted Answer

A decrease in the government budget deficit means the government is borrowing less, which reduces the demand for loanable funds. An increase in the government budget surplus means the government is borrowing more, which increases the supply of loanable funds.

A Decrease in the Government Budget Deficit Decreases the Loanable