Refer to Figure 5.1 for the Following Questions

Multiple Choice

Refer to Figure 5.1 for the following questions.
Figure 5.1

-Refer to Figure 5.1. Beginning at equilibrium, if the government budget deficit rises, which of the following would you expect to see?

A) The quantity of loanable funds demanded by firms will rise above $120 million.
B) The quantity of loanable funds demanded by firms will fall below $120 million.
C) The budget deficit will have no impact on the quantity of loanable funds demanded by firms.
D) The interest rate will fall below 4%.