A government budget deficit will have a:
A)positive effect on public saving causing a rightward shift in the supply of loanable funds.
B)positive effect on public saving causing a leftward shift in the supply of loanable funds.
C)negative effect on public saving causing a rightward shift in the supply of loanable funds.
D)negative effect on public saving causing a leftward shift in the supply of loanable funds.

Question

A government budget deficit will have a:
A)​positive effect on public saving causing a rightward shift in the supply of loanable funds.
B)​positive effect on public saving causing a leftward shift in the supply of loanable funds.
C)​negative effect on public saving causing a rightward shift in the supply of loanable funds.
D)​negative effect on public saving causing a leftward shift in the supply of loanable funds.

Quizplus · Accepted Answer

A government budget deficit means that the government is spending more than it is collecting in revenue. This implies that there is less money available for saving, as more money is being invested in government spending. Therefore, a budget deficit will have a negative effect on public saving, causing a leftward shift in the supply of loanable funds.

A Government Budget Deficit Will Have A