15. If at some interest rate desired investment is $400 billion, desired private saving is $600 billion, and the budget deficit is $300 billion, is there a surplus or a shortage in the market for loanable funds? What does this imply would happen to interest rates? 16. Congress and the President implement an investment tax credit. Which curve in the market for loanable funds shifts, which direction does it shift, and what happens to the interest rate?
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- Desired investment (I) = $400 billion - Desired private saving (S) = $600 billion - Budget deficit (D) = $300 billion Step 2: Calculate the total supply of loanable funds. - Total supply of loanable funds = Desired private saving (S) = $600 billion Step 3: Show more…
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