In the figure above, the SLF curve is the supply of loanable funds curve and the PSLF curve is the private supply of loanable funds curve
Given these curves, there is a government budget ________ and therefore the real interest rate is ________ than it would be otherwise.
A) deficit; lower
B) surplus; lower
C) deficit; higher
D) surplus; higher
E) deficit; not different
B
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Consider an economy over the years 2008 and 2009. The output in the economy has remained constant over the two years but the prices of all goods and services have halved. In such a situation,
A) the real GDP of the economy stays the same over the two years. B) the nominal GDP of the economy remains the same over the two years. C) the real GDP of the economy increases over the two years. D) the nominal GDP of the economy increases over the two years.
The process in which financial institutions accept savings from businesses, households, and governments and lend the funds to other businesses, households, and governments is called
A) central banking system. B) financial intermediation. C) moral hazard. D) adverse selection.