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Question
Figure26-5.Figure 26-5 shows the loanable funds market for a closed economy.
RefertoFigure26-5.Starting at point A, a reduction in government spending would cause
a. the quantity of loanable funds traded to increase to $125 and the interest rate to rise to 7% (point C).
b. the quantity of loanable funds traded to decrease to $75 and the interest rate to fall to 5% (point B).
c. the quantity of loanable funds traded to increase to $125 and the interest rate to fall to 5% (point D).
d. the quantity of loanable funds traded to decrease to $75 and the interest rate to rise to 7% (point E).
Answer
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