APFIVE Government Deficit and the Loanable Funds Market
When the government finances a budget deficit by borrowing, what is the most likely effect in the loanable funds market?
A
Interest rates will rise, thereby reducing private investment.
B
There is no effect on interest rates as public and private funds remain segregated.
C
Interest rates will fall, encouraging greater private borrowing.
D
Private savings will decrease, causing a decline in the overall supply of loanable funds.
Question Leaderboard
| Rank | |||||
|---|---|---|---|---|---|
| #1 | 27suvvadas | 1 | 1 | 0m 00s | 100 |
| #2 | mc1023021 | 1 | 1 | 0m 00s | 100 |
| #3 | tharakornperm | 1 | 1 | 0m 00s | 100 |
Items per page:
10
1 – 3 of 3