Scenario 32-1

During a recession government revenues from the income tax fall and government transfers rise as the reduction in income and the rise in unemployment raise the number of people who qualify for benefits.
-Refer to Scenario 32-1. What does this change in the budget deficit do to the equilibrium values of the interest rate and the quantity of loanable funds?

Question

Scenario 32-1
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During a recession government revenues from the income tax fall and government transfers rise as the reduction in income and the rise in unemployment raise the number of people who qualify for benefits.
-Refer to Scenario 32-1. What does this change in the budget deficit do to the equilibrium values of the interest rate and the quantity of loanable funds?

Quizplus · Accepted Answer

The Answer of Scenario 32-1
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During a recession government revenues from the income tax fall and government transfers rise as the reduction in income and the rise in unemployment raise the number of people who qualify for benefits.
-Refer to Scenario 32-1. What does this change in the budget deficit do to the equilibrium values of the interest rate and the quantity of loanable funds?

Scenario 32-1 ​

Scenario 32-1