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Economics

Let’s suppose the situation where the newly formed government act to cut government spending and, by doing so, eliminate the current federal government budget deficit.

a) Does this change in policy shift the demand curve or the supply curve in the loanable funds market?

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

c) Does the interest rate rise or fall as a result of this change in policy?

d) What happens to private investment as a result of this change in policy?

e) What effect would this policy have on the productivity of workers?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91344064

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