Recently, the Canadian government has gone from a surplus to a deficit. Assuming other things remain the same, what does this change mean?
A) that the supply of loanable funds shifted right
B) that the supply of loanable funds shifted left
C) that the demand for loanable funds shifted right
D) that the demand for loanable funds shifted left

Question

Quizplus · Accepted Answer

When the Canadian government goes from a surplus to a deficit, it means that they are spending more than they are earning, resulting in a decrease in the supply of loanable funds. This shift in the supply curve would move to the left.

Recently, the Canadian Government Has Gone from a Surplus to a Deficit