Which of the following occurs when the government runs a budget surplus? a. The supply of loanable funds decreases b. The supply of loanable funds increases c. The demand for loanable funds increases d. The demand for loanable funds decreases
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This extra money can be used to pay off existing debt or it can be saved for future use. When the government uses its surplus to pay off debt, it is essentially reducing the amount of government bonds in the market. This means that there are fewer bonds for people Show more…
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