An increase in the government budget deficit will shift the ________ curve for loanable funds to the ________ and the equilibrium real interest rate will ________.

Question

Quizplus · Accepted Answer

An increase in the government budget deficit will increase the demand for loanable funds, shifting the demand curve for loanable funds to the right. This will result in a higher equilibrium real interest rate. Therefore, the correct choice is option B, where the supply curve for loanable funds shifts left, indicating a decrease in the supply of loanable funds and a rise in the equilibrium real interest rate.

An Increase in the Government Budget Deficit Will Shift the ________