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The graph shows the market for loanable funds. Show the effect of an increase in government borrowing by shifting the proper curve. What is the effect of this change on the interest rate? It rises. It falls. It remains the same. Correct Answer What is the effect of this change on consumption spending? It rises. It falls. It remains the same. Correct Answer Interest rate Incorrect Answer Borrowing/savings (5) Supply Demand

The graph shows the market for loanable funds. Show the effect of an increase in government borrowing by shifting the proper curve. What is the effect of this change on the interest rate? It rises. It falls. It remains the same. Correct Answer What is the effect of this change on consumption spending? It rises. It falls. It remains the same. Correct Answer Interest rate Incorrect Answer Borrowing/savings (5) Supply Demand

ECON MACRO
ECON MACRO
5th Edition
ISBN:9781337000529
Author:William A. McEachern
Publisher:William A. McEachern
Chapter11: Fiscal Policy
Section: Chapter Questions
Problem 1.7P
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The graph shows the market for loanable funds. Show the effect of an increase in government borrowing by shifting the proper curve. What is the effect of this change on the interest rate? It rises. It falls. It remains the same. Correct Answer What is the effect of this change on consumption spending? It rises. It falls. It remains the same. Correct Answer Interest rate Incorrect Answer Borrowing/savings (5) Supply Demand
Transcribed Image Text:The graph shows the market for loanable funds. Show the effect of an increase in government borrowing by shifting the proper curve. What is the effect of this change on the interest rate? It rises. It falls. It remains the same. Correct Answer What is the effect of this change on consumption spending? It rises. It falls. It remains the same. Correct Answer Interest rate Incorrect Answer Borrowing/savings (5) Supply Demand
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