The Congressional Budget Office reported that federal budget deficits in the United States were likely to increase during the next decade, and due to these higher deficits, "the nation's capital stock ultimately would be smaller, and productivity and
income would be lower than would be the case if the debt was smaller." This higher budget deficit could crowd out business investment if it resulted in an increase in interest rates. Crowding out of business investment would be represented graphically by a
A) a shift in the demand curve for loanable funds to the right.
B) a shift in the demand curve for loanable funds to the left.
C) a movement to the right along the demand curve for loanable funds.
D) a movement to the left along the demand curve for loanable funds.
Answer: D
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