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 means the government needs to borrow more money, which increases the supply of loanable funds. This will shift the supply curve for loanable funds to the right, which will result in a lower equilibrium real interest rate. Therefore, the correct choice is B, where supply shifts to the left and the equilibrium real interest rate rises.

An Increase in the Government Budget Deficit Will Shift the ________