Suppose That Chile Has a Budget Surplus, and Then Goes

Multiple Choice

Suppose that Chile has a budget surplus, and then goes into deficit. Which of the following best predicts the consequences?

A) National saving would increase, and Chile's supply of loanable funds would shift to the left.
B) National saving would increase, and Chile's demand for loanable funds would shift to the right.
C) National saving would decrease, and Chile's supply of loanable funds would shift to the left.
D) National saving would decrease, and Chile's demand for loanable funds would shift to the right.