In 2007, Singapore's government ran a budget surplus of $4.5 billion. The budget surplus ________ loanable funds and ________ the real interest rate.

Question

Quizplus · Accepted Answer

A budget surplus increases the supply of loanable funds in the economy because the government has extra money that it can lend out or invest. This increased supply of loanable funds tends to lower the real interest rate, as there is more money available to borrow.

In 2007, Singapore's Government Ran a Budget Surplus of $4