Use the following to answer question 100:
-(Figure: The Market for Loanable Funds with Government Borrowing) Use Figure: The Market for Loanable Funds with Government Borrowing. After an increase in government borrowing, the new equilibrium interest rate will rise from 6% to _____% and the amount of private savings will _____.

Question

Use the following to answer question 100: 
-(Figure: The Market for Loanable Funds with Government Borrowing) Use Figure: The Market for Loanable Funds with Government Borrowing. After an increase in government borrowing, the new equilibrium interest rate will rise from 6% to _____% and the amount of private savings will _____.

Quizplus · Accepted Answer

An increase in government borrowing shifts the demand curve for loanable funds to the right, leading to a higher equilibrium interest rate and an increase in the amount of savings, as savers respond to the higher interest rate by saving more.

Use the Following to Answer Question 100