Figure 19-4
-Refer to Figure 19-4. Suppose that the government goes from a budget surplus to a budget deficit. The effects of the change could be illustrated by
A)shifting the demand curve in panel a to the right and the demand curve in panel c to the left.
B)shifting the demand curve in panel a to the left and the supply curve in panel c to the left.
C)shifting the supply curve in panel a to the right and the demand curve in panel c to the right.
D)shifting the supply curve in panel a to the left and the supply curve in panel c to the left.

Question

Figure 19-4 
-Refer to Figure 19-4. Suppose that the government goes from a budget surplus to a budget deficit. The effects of the change could be illustrated by
A)shifting the demand curve in panel a to the right and the demand curve in panel c to the left. 
B)shifting the demand curve in panel a to the left and the supply curve in panel c to the left. 
C)shifting the supply curve in panel a to the right and the demand curve in panel c to the right. 
D)shifting the supply curve in panel a to the left and the supply curve in panel c to the left.

Quizplus · Accepted Answer

A government budget deficit can lead to a decrease in national savings, which shifts the supply curve for loanable funds to the left in both panels, representing a decrease in available funds for investment.

Figure 19-4 -Refer to Figure 19-4. Suppose That the Government Goes from Government