In the loanable funds market,an increase in government borrowing will most likely:

Question

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An increase in government borrowing shifts the demand for loanable funds to the right, increasing interest rates and decreasing bond prices. This is because there is now more competition for funds, leading to an increase in the market interest rate to encourage savers to lend their money. As interest rates increase, bond holders will want a higher return on their investment, leading to a decrease in bond prices.

In the Loanable Funds Market,an Increase in Government Borrowing Will