Exam 23: Finance, Saving, and Investment

Table 23.3.3 -Refer to Table 23.3.3.The table shows the demand for loanable funds schedule and the private supply of loanable funds schedule when the government's budget is balanced.If the Ricardo-Barro effect occurs,and if the government budget deficit is $2.0 trillion,the real interest rate is ________ percent a year and the quantity of investment is ________ trillion.

Which of the following is true? I.As the real interest rate increases,people increase the quantity they save. II.The supply of loanable funds curve is downward sloping. III.As disposable income increases,the supply of loanable funds curve becomes steeper.