QUESTION 35 Figure 26-4. On the horizontal axis of the graph. L represents the q

Question

QUESTION 35 Figure 26-4. On the horizontal axis of the graph. L represents the quanty of loanable funds in billions of dollars. Supply 8% 6% D2 $50 $62 Refer to Figure 26-4. Which of the following events could explain a shift of the demand-for-loanable-funds curve from Di to D? o a. The tax code is reformed to encourage greater saving. e b. The government starts running a budget deficit. c. The tax code is reformed to encourage greater investment. o d. The government starts running a budget surplus. QUESTION 36

Explanation / Answer

Option b ) an increase in government spending will cause the demand for loanable funds to increase causing a rightward shift of the curve. a budget effect occurs when a government spends more than it earns.

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