Start practising
Practice mode Budget Deficits And The Trade Balance

Which statement about the loanable funds market is correct?

Correct answer B. An increase in the government budget deficit shifts the supply of loanable funds to the left

Explanation

A budget deficit is negative public saving, so it reduces national saving and shifts the supply of loanable funds to the left, raising the real interest rate.

Report a problem

Answer checked How we write and check questions

Tip: press A, B, C or D to answer, and N for the next question.

Advertisement

More Budget Deficits And The Trade Balance questions

See all
Question 01 Budget Deficits And The Trade Balance

What is the effect of an increase in Pakistan’s government budget deficit?

Correct answer A. It decreases Pakistan's net exports and net capital outflow by the same amount

Open question
Question 02 Budget Deficits And The Trade Balance

What does the phrase ‘twin deficits’ refer to?

Correct answer D. A country's trade deficit and its government budget deficit

Open question
Advertisement
Question 03 Budget Deficits And The Trade Balance

Which statement about the market for foreign currency exchange is correct?

Correct answer D. An increase in Pakistan's net capital outflow increases the supply of rupees and the rupee depreciates

Open question

Discussion

Have a question about this answer?

Your email address will not be published. Required fields are marked *

Links and website addresses are not allowed in comments.