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The Above Table Has the Private Demand for Loanable Funds

Question 21

Multiple Choice

 Real interest rate  (percent per year)   Demand for loanable funds (billions of  2005 dollars)   Supply of loanable funds  (billions of  2005 dollars)  3750450470050056505506600600755065085007009450750\begin{array} { c c c } \hline \begin{array} { c } \text { Real interest rate } \\\text { (percent per year) }\end{array} & \begin{array} { c } \text { Demand for loanable funds} \\\text { (billions of } \\\text { 2005 dollars) }\end{array} & \begin{array} { c } \text { Supply of loanable funds }\\\text { (billions of } \\\text { 2005 dollars) }\end{array} \\\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 loanable funds schedules
- If the government budget deficit is $200 billion, and there is no Ricardo-Barro effect, the equilibrium real interest rate is-------------------- and the equilibrium quantity of investment is
--------------------.


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

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