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AP® Macroeconomics

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Scarcity and Loanable Funds

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Why is the loanable funds market a good way to sort out who gets scarce resources?

A

Businesses get first chance at borrowing and government follows with what is left.

B

Important government spending is prioritized over business spending

C

The price system allocates scarce resources to those who value them most.

D

Everybody gets the same interest rate based on government programs.

E

Consumer goods production could not get funding any other way.