Other things the same, an increase in government expenditures with no change in taxes makes national saving
A)rise. The supply of loanable funds shifts right.
B)rise. The demand for loanable funds shifts right.
C)fall. The supply of loanable funds shifts left.
D)fall. The demand for loanable funds shifts left.

Question

Quizplus · Accepted Answer

An increase in government expenditures leads to a decrease in national saving, as the government is spending more and not saving/investing the money. This decrease in savings causes the supply of loanable funds to shift leftward, as there are fewer funds available to be loaned out.

Other Things the Same, an Increase in Government Expenditures with No