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AP® Macroeconomics

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Surplus & Loanable Funds

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Suppose the federal government incurred a surplus over the course of the fiscal year whereas in previous years it had run deficits.

How would that impact the loanable funds market?

A

Real interest rates will fall.

B

Real interest rates will rise.

C

Real interest rates will remain unchanged.

D

Supply of loanable funds will decrease.

E

Demand for loanable funds will increase