If a country's government increases its budget deficit, then the
A)supply of loanable funds will increase.
B)supply of loanable funds will decrease.
C)real interest rate will fall.
D)real exchange rate will fall.

Question

Quizplus · Accepted Answer

When a government increases its budget deficit, it often borrows more from the loanable funds market, reducing the supply of loanable funds available for private investment.

If a Country's Government Increases Its Budget Deficit, Then the