When the government funds spending projects by borrowing money (issuing government bonds), demand in the loanable funds market will _______ and interest rates generally ______. A: Increase; rise. B: Decrease; fall. C: Decrease; rise. D: Increase; fall.
When the government funds spending projects by borrowing money (issuing government bonds), demand in the loanable funds market will _______ and interest rates generally ______. A: Increase; rise. B: Decrease; fall. C: Decrease; rise. D: Increase; fall.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: Savings,investment And The Financial System
Section: Chapter Questions
Problem 4CQQ
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When the government funds spending projects by borrowing money (issuing government bonds), demand in the loanable funds market will _______ and interest rates generally ______.
A: Increase; rise.
B: Decrease; fall.
C: Decrease; rise.
D: Increase; fall.
Please provide an explanation as well. Thank you!
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