When the government operates in a budget deficit, what might be the effect on gross private domestic investment and the supply of loanable funds? Investment Supply of loanable funds A. increase increase B. increase decrease C. decrease remain the same D. decrease increase E. decrease increase
Added by Margarita G.
Step 1
A budget deficit occurs when a government's expenditures exceed its revenues, leading it to borrow money to finance the gap. Show more…
Show all steps
Your feedback will help us improve your experience
James Kiss and 72 other Microeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
Which of the following statements explains the effects of crowding out in an economy over the long run? A) Public investment will increase, and that will increase potential output in the long run. B) Households will tend to save more money, and that will reduce the supply of loanable funds in the long run. C) Aggregate demand will increase, and that will increase economic growth in the long run. D) Capital accumulation will increase, and that will increase aggregate supply in the long run. E) The stock of physical capital will be reduced, and that will reduce economic growth in the long run.
James K.
Caroline M.
If foreign income and wealth decrease, this would most likely a. not affect the market for loanable funds. b. cause the supply of loanable funds to increase. c. cause the supply of loanable funds to decrease. d. cause the demand for loanable funds to increase in order for foreigners to maintain consumption. e. cause the demand for loanable funds to decrease.
Jennifer S.
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Transcript
18,000,000+
Students on Numerade
Trusted by students at 8,000+ universities
Watch the video solution with this free unlock.
EMAIL
PASSWORD
