15. In the loanable funds market of a closed economy, a government reduces its purchases, moving from a budget deficit of $100 million to a budget surplus of $50 million. Which of the following statements are correct? 1. Planned investment and consumption rise by $150 million. II. The government changes from a demander of funds to a supplier of funds. III. The equilibrium interest rate falls. II and III only. I only. I, II and III only. None of the statements are correct. I and II only.
15. In the loanable funds market of a closed economy, a government reduces its purchases, moving from a budget deficit of $100 million to a budget surplus of $50 million. Which of the following statements are correct? 1. Planned investment and consumption rise by $150 million. II. The government changes from a demander of funds to a supplier of funds. III. The equilibrium interest rate falls. II and III only. I only. I, II and III only. None of the statements are correct. I and II only.
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter8: Savings,investment And The Financial System
Section: Chapter Questions
Problem 4PA
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Question
Justify for the correct option
![15.
In the loanable funds market of a closed economy, a government reduces its purchases,
moving from a budget deficit of $100 million to a budget surplus of $50 million. Which of the
following statements are correct?
1. Planned investment and consumption rise by $150 million.
II. The government changes from a demander of funds to a supplier of funds.
III. The equilibrium interest rate falls.
II and III only.
I only.
I, II and III only.
None of the statements are correct.
I and II only.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F211fd0d2-45cd-4603-b99f-222084379316%2F9412d2fc-433f-4b23-8af4-187caf5c3266%2Fchkj4qc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:15.
In the loanable funds market of a closed economy, a government reduces its purchases,
moving from a budget deficit of $100 million to a budget surplus of $50 million. Which of the
following statements are correct?
1. Planned investment and consumption rise by $150 million.
II. The government changes from a demander of funds to a supplier of funds.
III. The equilibrium interest rate falls.
II and III only.
I only.
I, II and III only.
None of the statements are correct.
I and II only.
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