Figure 13-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves.
-Refer to Figure 13-3. Which of the following movements would be consistent with the government budget going from deficit to surplus and the simultaneous enactment of an investment tax credit?
A)a movement from Point A to Point C
B)a movement from Point B to Point A
C)a movement from Point B to Point F
D)a movement from Point C to Point B

Question

Figure 13-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. 
-Refer to Figure 13-3. Which of the following movements would be consistent with the government budget going from deficit to surplus and the simultaneous enactment of an investment tax credit?
A)a movement from Point A to Point C 
B)a movement from Point B to Point A 
C)a movement from Point B to Point F 
D)a movement from Point C to Point B

Quizplus · Accepted Answer

A government budget moving from deficit to surplus would decrease the supply of loanable funds, shifting the supply curve left. An investment tax credit would increase the demand for loanable funds, shifting the demand curve right. This combination is consistent with a movement from Point B to Point F.