If political influences, independent of any economic forces, lead to a larger government budget deficit, what will be the effect on the loanable funds market?
a. The interest rate will rise and the amount of saving will increase.
b. The interest rate will fall and the amount of saving will increase.
c. The interest rate will rise and the amount of saving will decrease.
d. The interest rate will fall and the amount of saving will decrease.
e. The interest rate will rise but the change in saving will be ambiguous.
A
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