Suppose government moves to increase its budget deficit by $30 million. With the aid of the market for loanable funds diagram, illustrate the impact of this government spending. From the diagram drawn carefully explain what happens to i. rate of interest ii. private spending iii. nationals savings

Suppose government moves to increase its budget deficit by $30 million. With the aid of the market for loanable funds diagram, illustrate the impact of this government spending. From the diagram drawn carefully explain what happens to i. rate of interest ii. private spending iii. nationals savings

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter21: Financial Markets, Saving, And Investment

Section: Chapter Questions

Problem 8P

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a. Suppose government moves to increase its budget deficit by $30 million. With the aid of the market for loanable funds diagram, illustrate the impact of this government spending.

From the diagram drawn carefully explain what happens to

i. rate of interest

ii. private spending

iii. nationals savings

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