Multiple Choice
During financial crisis of 2008-09, the government rescued financial firms and the auto industry. As a result,
A) the government's budget deficit increased, the government's demand for loanable funds increased and private investment was crowded out.
B) real interest rates decreased.
C) the supply of loanable funds decreased in response to the government's budget deficit.
D) the private demand for loanable funds increased.
E) the government's rescue plan created a surplus of loanable funds.
Correct Answer:
Verified
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