In the first part of the decade that began in 2000, the U.S. government went from a surplus to a deficit. Other things the same, this means the
A)supply of loanable funds shifted to the right.
B)supply of loanable funds shifted to the left.
C)demand for loanable funds shifted to the right.
D)demand for loanable funds shifted to the left.

Question

Quizplus · Accepted Answer

When the government goes from a surplus to a deficit, it means that the government is borrowing more than it is saving. This leads to a decrease in the supply of loanable funds, as the government is competing with other borrowers for a limited pool of funds. Therefore, the correct answer is B, supply of loanable funds shifted to the left.

In the First Part of the Decade That Began in 2000