Use the table below to answer the following questions.
Table 23.3.7
The table shows an economy's demand for loanable funds schedule and supply of loanable funds schedule when the government's budget is balanced.

-Consider Table 23.3.7. If the government's budget becomes a deficit of $1.0 trillion, what is the quantity of investment?

Question

Use the table below to answer the following questions.
Table 23.3.7
The table shows an economy's demand for loanable funds schedule and supply of loanable funds schedule when the government's budget is balanced.
 
-Consider Table 23.3.7. If the government's budget becomes a deficit of $1.0 trillion, what is the quantity of investment?

Quizplus · Accepted Answer

The quantity of investment is determined by the level of savings in the economy. If the government's budget becomes a deficit of $1.0 trillion, it reduces the amount of national savings available for investment. Assuming the initial savings were $8.5 trillion (from the choices), a $1.0 trillion deficit would reduce available savings to $7.5 trillion, which is the quantity of investment.

Use the Table Below to Answer the Following Questions