Suppose the government ran a budget surplus in 2008 and a larger surplus in 2009.The loanable funds model would predict that,as a result of the increase in the surplus,
A) both the government debt and interest rates increased between 2008 and 2009.
B) both the government debt and interest rates decreased between 2008 and 2009.
C) the government debt increased and interest rates decreased between 2008 and 2009.
D) the government debt decreased and interest rates increased between 2008 and 2009.
Correct Answer:
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