India's government runs a government budget surplus. If there is no Ricardo-Barro effect, the surplus means that the

Question

Quizplus · Accepted Answer

When the government runs a budget surplus, it means it is saving more than it is spending, which increases the overall supply of loanable funds. Without the Ricardo-Barro effect, this surplus shifts the supply of loanable funds curve to the right, indicating that the private supply of loanable funds curve lies to the left of the total supply curve.

India's Government Runs a Government Budget Surplus