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(Figure: The Market for Loanable Funds III) Use Figure: The Market for Loanable Funds III. Suppose the government in a closed economy finances deficits by selling bonds. If it decreases defense spending by $200 billion, the equilibrium interest rate will: Interest rate (%) 30 27 24 21 18 15 12 3222222 6 63 E 0 200 S D 400 600 800 1,000 1,200 Quantity of loanable funds (billions of dollars) rise to 18%. not change. fall to 13.5%. fall to 12%.

(Figure: The Market for Loanable Funds III) Use Figure: The Market for Loanable Funds III. Suppose the government in a closed economy finances deficits by selling bonds. If it decreases defense spending by $200 billion, the equilibrium interest rate will: Interest rate (%) 30 27 24 21 18 15 12 3222222 6 63 E 0 200 S D 400 600 800 1,000 1,200 Quantity of loanable funds (billions of dollars) rise to 18%. not change. fall to 13.5%. fall to 12%.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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(Figure: The Market for Loanable Funds III) Use Figure: The Market for Loanable Funds III. Suppose the government in a closed economy finances deficits by selling bonds. If it decreases defense spending by $200 billion, the equilibrium interest rate will: Interest rate (%) 30 27 24 21 18 15 12 E 9 6 3 0 S D 200 400 600 800 1,000 1,200 Quantity of loanable funds (billions of dollars) rise to 18%. not change. ☐ fall to 13.5%. fall to 12%.
Transcribed Image Text:(Figure: The Market for Loanable Funds III) Use Figure: The Market for Loanable Funds III. Suppose the government in a closed economy finances deficits by selling bonds. If it decreases defense spending by $200 billion, the equilibrium interest rate will: Interest rate (%) 30 27 24 21 18 15 12 E 9 6 3 0 S D 200 400 600 800 1,000 1,200 Quantity of loanable funds (billions of dollars) rise to 18%. not change. ☐ fall to 13.5%. fall to 12%.
(Figure: The Market for Loanable Funds III) Use Figure: The Market for Loanable Funds III. Suppose the government in a closed economy finances deficits by selling bonds. If it decreases defense spending by $200 billion, the equilibrium interest rate will: Interest | ( billions of dollars) rise to 18%. not change. fall to 13.5% (This is incorrect) fall to 12% . (Figure: The Market for Loanable Funds III) Use Figure: The Market for Loanable Funds III. Suppose the government in a closed economy finances deficits by selling bonds. If it decreases defense spending by $200 billion, the equilibrium interest rate will: Interest rate (%) 30 27 21 18 2222 24 15 12 E 9 6 3 0 200 rise to 18%. S D 400 600 800 1,000 1,200 Quantity of loanable funds (billions of dollars)
Transcribed Image Text:(Figure: The Market for Loanable Funds III) Use Figure: The Market for Loanable Funds III. Suppose the government in a closed economy finances deficits by selling bonds. If it decreases defense spending by $200 billion, the equilibrium interest rate will: Interest | ( billions of dollars) rise to 18%. not change. fall to 13.5% (This is incorrect) fall to 12% . (Figure: The Market for Loanable Funds III) Use Figure: The Market for Loanable Funds III. Suppose the government in a closed economy finances deficits by selling bonds. If it decreases defense spending by $200 billion, the equilibrium interest rate will: Interest rate (%) 30 27 21 18 2222 24 15 12 E 9 6 3 0 200 rise to 18%. S D 400 600 800 1,000 1,200 Quantity of loanable funds (billions of dollars)
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