00:01
So here we're talking loanable funds, right? so we're going to draw loanable funds is an amount between the amount of loanable funds, which we also might call investment, and the real interest rate, right? demand slopes down and supply slopes up, right? the reason right, with a higher rate of interest, you want to save more.
00:23
And with a lower rate of interest, you want to borrow more, whether that's for investment or whatever other use we have.
00:32
So now we are going to think about the government going from deficit to surplus.
00:39
So government from deficit to surplus.
00:46
So the way that i would model this is first, so first of all, there's no more borrowing, right? so the government doesn't need to borrow money anymore, the government used to be borrowing money, but now the government is no longer borrowing money.
01:05
So first of all, there would be a reduction in the demand for funds, right, a reduction in the demand for funds, because the government is no longer borrowing money, that would be part one.
01:17
But now part two, the government is saving, right, the government is saving.
01:26
So the government is actually going to put some some money back into the market for loanable funds, right.
01:32
So here we've got an increase in the savings curve, coming from the government actually deciding to to accumulate some funds...