Actually increases governments budget deficit dramatically

Reference no: EM13693966

Suppose a fiscal stimulus package that called for a large increase in government spending actually increases governments’ budget deficit dramatically

a. When the government runs a larger budget deficit, dose that shit the demand curve or the supply curve for loanable funds?

b. Use a supply-and-demand diagram for loanable funds to show in which direction the relevant curve shifts.

c. According to the loanable funds framework, does the interest rate rise or fall as a result of the larger budget deficit?

d. According to the loanable funds framework, does national saving rise or fall as a result of the larger budget deficit?

e. According to the loanable funds framework, does investment rise or fall as a result of the larger budget deficit?

Reference no: EM13693966

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