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
You might also like to view...
Other things equal, a positive supply shock would
a. Lower the price level b. Increase real output c. Shift AD right d. Do a. and b. but not c.
In many cities in the United States, a single firm provides electricity. Those firms are:
A. perfect competitors. B. oligopolists. C. monopolists. D. monopolistic competitors.
Refer to the information provided in Figure 6.9 below to answer the question(s) that follow.
Figure 6.9Refer to Figure 6.9. The ________ video game rental has a marginal utility of eight.
A. first B. second C. third D. fourth
The only two options to control the growth of healthcare spending are
a. price controls and political rationing or competition and market prices. b. taxation or political mandates. c. subsidizing of healthcare insurance or government provision of healthcare. d. free healthcare or subsidized healthcare.