-In the figure above, the SLF curve is the supply of loanable funds curve and the PSLF curve is the private supply of loanable funds curve. If there is no

-In the figure above, the SLF curve is the supply of loanable funds curve and the PSLF curve is the private supply of loanable funds curve. If there is no Ricardo-Barro effect and the government now runs a balanced budget,
A) the equilibrium interest rate is 4 per cent and investment is $1.8 trillion.
B) the interest rate will increase from 4 per cent to 6 per cent.
C) the equilibrium interest rate is 6 per cent and investment is $1.6 trillion.
D) there is shortage of investment funds of $0.4 trillion.
E) there is a surplus of investment funds and the interest rate falls to 4 per cent.

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