Manipulate the graph to show what will happen to supply and demand in the market for loanable funds when the government budget deficit increases, changing the equilibrium quantity of loanable funds by 3 percentage points. Ceteris paribus, what is the new interest rate? interest rate: Ceteris paribus, private investment would O not change. decrease. O increase. % Interest rate (%) 10 9 8 7 6 5 4 3 2 1 0 0 • 2 Supply Demand 4 6 8 10 12 14 16 18 20 22 24 26 28 Quantity of loanable funds (% of GDP)

Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter21: Financial Markets, Saving, And Investment
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Manipulate the graph to show what will happen to supply
and demand in the market for loanable funds when the
government budget deficit increases, changing the
equilibrium quantity of loanable funds by 3
percentage points.
Ceteris paribus, what is the new interest rate?
interest rate:
Ceteris paribus, private investment would
O not change.
decrease.
O increase.
%
Interest rate (%)
10
9
8
7
6
5
4
3
2
1
0
0
•
2
Supply
Demand
4
6 8 10 12 14 16 18 20 22 24 26 28
Quantity of loanable funds (% of GDP)
Transcribed Image Text:Manipulate the graph to show what will happen to supply and demand in the market for loanable funds when the government budget deficit increases, changing the equilibrium quantity of loanable funds by 3 percentage points. Ceteris paribus, what is the new interest rate? interest rate: Ceteris paribus, private investment would O not change. decrease. O increase. % Interest rate (%) 10 9 8 7 6 5 4 3 2 1 0 0 • 2 Supply Demand 4 6 8 10 12 14 16 18 20 22 24 26 28 Quantity of loanable funds (% of GDP)
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