An increase in the government budget deficit ________.If the country is an international borrower,the government budget deficit ________.If the country is an international lender,the government budget deficit ________.

Question

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An increase in the government budget deficit increases the demand for loanable funds as the government needs to borrow more money to finance its spending. If the country is an international borrower, then an increase in the government budget deficit will increase foreign borrowing, as the country will need to borrow more money from other countries to finance its deficit. However, if the country is an international lender, then an increase in the government budget deficit will decrease foreign lending, as the country will have less money to lend to other countries due to its increased demand for loanable funds.

An Increase in the Government Budget Deficit ________