All other things equal, an increase in government borrowing will ________   a. shift the demand curve for loanable funds to the right, increasing interest rates.   b. shift the supply curve of loanable funds to the right, decreasing interest rates.   c. shift the demand curve for loanable funds to the left, decreasing interest rates.   d. shift the supply curve of loanable funds to the left, but interest rates remain unchanged.

Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter21: Financial Markets, Saving, And Investment
Section: Chapter Questions
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All other things equal, an increase in government borrowing will ________
  a.

shift the demand curve for loanable funds to the right, increasing interest rates.

  b.

shift the supply curve of loanable funds to the right, decreasing interest rates.

  c.

shift the demand curve for loanable funds to the left, decreasing interest rates.

  d.

shift the supply curve of loanable funds to the left, but interest rates remain unchanged.

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