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If the Government Begins to Run a Larger Budget Deficit

Question 135

Multiple Choice

If the government begins to run a larger budget deficit, the demand for loanable funds ________ and the real interest rate ________.


A) decreases; falls
B) decreases; rises
C) increases; rises
D) increases; falls
E) increases; rises or falls depending on the change in the supply of loanable funds

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