The graph illustrates the demand for loanable funds and the private supply of loanable funds when the government budget is balanced.   In the graph, draw the supply of loanable funds curve if the government budget surplus is $0.2 trillion. Label the curve.   Draw a point to show the new equilibrium real interest rate and quantity of loanable funds.   >>> Draw only the objects specified in the question.

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Public Saving

Public saving deals with the amount which has been in excess after meeting all the obligatory expenses and investment of the government. Taxes are collected by the government to meet its day-to-day expenditures. The obligatory expenses include all those expenses which are mandatory for the government. It cannot be avoided as it is inevitable.