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. If there is no Ricardo-Barro effect and the government now runs a balanced budget,
A) the interest rate will increase from 4 percent to 6 percent.
B) there is a surplus of investment funds and the interest rate falls to 4 percent.
C) there is shortage of investment funds of $0.4 trillion.
D) the equilibrium interest rate is 6 percent and investment is $1.6 trillion.
E) the equilibrium interest rate is 4 percent and investment is $1.8 trillion.
D
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Which of the following will happen if there is a fall in the supply of credit in an economy without any change in the demand for credit?
A) The real output will fall. B) The labor demand in the economy will increase. C) Its consumption expenditure will increase. D) The real interest rate will fall.
Refer to Figure 19-5. Suppose the pegged exchange rate is $0.14/yuan and U.S. consumers increase their demand for Chinese products. Using the figure above, this would
A) increase the surplus of Chinese yuan. B) decrease the shortage of Chinese yuan. C) decrease the surplus of Chinese yuan. D) increase the shortage of Chinese yuan.