In the classical model,if the amount households wish to save exceeds the sum of the amount businesses wish to invest plus the government's budget deficit,the loanable funds market
A) will be in disequilibrium,but this does not prevent equilibrium in the total economy
B) will be in disequilibrium,and we would expect the supply of funds to decrease
C) will be in disequilibrium,and we would expect the interest rate to rise
D) will be in disequilibrium,and we would expect the interest rate to fall
E) may be in equilibrium,because unplanned inventory changes have not been included

Question

Quizplus · Accepted Answer

If households wish to save more than the sum of business investments and the government's budget deficit, there is an excess supply of loanable funds, leading to a decrease in interest rates to restore equilibrium.

In the Classical Model,if the Amount Households Wish to Save