A country initially has an equilibrium real interest rate of 4 percent and an equilibrium quantity of investment of $2 trillion. The government's budget deficit then increases. According to the crowding-out effect, the
A) demand for loanable funds curve shifts rightward, the real interest rate rises, and investment decreases.
B) supply of loanable funds curve shifts rightward, the real interest rate rises, and investment increases.
C) supply of loanable funds curve shifts leftward, the real interest rate falls, and investment decreases.
D) demand for loanable funds curve shifts leftward, the real interest rate falls, and investment increases.
E) demand for loanable funds curve shifts rightward, the real interest rate falls, and investment increases.
A
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Define the following terms and explain their importance to the study of economics:
a. regressive tax b. proportional tax c. progressive tax d. direct tax e. indirect tax
The demand curve for land will shift to the right because of a(n): a. decrease in the demand for agricultural produce. b. increase in the emigration of skilled workers
c. increase in the demand for residential apartments. d. decrease in the disposable income of the residents.