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The Above Table Has the Private Demand for Loanable Funds

Question 11

Multiple Choice

 Demand for loanable funds  Supply of loanable funds  Real interest rate  (billions of  (billions of  (percent per year)   2005 dollars)  2005 dollars)  3750450470050056505506600600755065085007009450750\begin{array} { c c c } \hline &\text { Demand for loanable funds }&\text { Supply of loanable funds }\\\text { Real interest rate } & \text { (billions of } & \text { (billions of } \\\text { (percent per year) } & \text { 2005 dollars) } & 2005 \text { dollars) } \\\hline 3 & 750 & 450 \\4 & 700 & 500 \\5 & 650 & 550 \\6 & 600 & 600 \\7 & 550 & 650 \\8 & 500 & 700 \\9 & 450 & 750 \\\hline\end{array}


The above table has the private demand for loanable funds and the private supply of loanablefunds schedules.
- If the government budget surplus is $200 billion, and there is a Ricardo-Barro effect, the equilibrium real interest rate is-------------------- and the equilibrium quantity of loanable funds is --------------------.


A) 6 percent; $600 billion
B) 4 percent; $500 billion
C) 8 percent; $700 billion
D) 8 percent, $500 billion
E) 4 percent; $700 billion

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