An increase in the government budget surplus 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 surplus will increase the supply of loanable funds, shifting the supply curve for loanable funds to the right. This will lead to a fall in the equilibrium real interest rate. This is because there will be more funds available for borrowing, which will drive down the cost of borrowing (i.e. the interest rate).

An Increase in the Government Budget Surplus Will Shift the ________