Question

When the federal government's budget deficit decreases, the aggregate___________ curve for bonds shifts to the____________. supply;...

When the federal government's budget deficit decreases, the aggregate___________ curve for bonds shifts to the____________.

supply; right.

supply; left.

demand; left.

demand; right.

Can't Tell from the information provided

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

As it can be seen in the diagram that initial equilibrium interest rate is determined by the equality of demand and supply curve of the loanable fund.

So when the federal government’s budget deficit decreases, the demand for loanable fund decreases by the government, so the demand curve for fund shifts leftward. All this has been shown in the below diagram.

Hence it can be said that when the federal government's budget deficit decreases, the aggregate demand curve for bonds shifts to the left.

Hence option third is the correct answer.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The increase of budget deficit, decreases the supply of loanable funds and the supply curve shifts...
The increase of budget deficit, decreases the supply of loanable funds and the supply curve shifts left. Discuss the possible effects of this crowding out effect in an open economy.
If the supply of dollars in the market for foreign-currency exchange shifts left, then the exchange...
If the supply of dollars in the market for foreign-currency exchange shifts left, then the exchange rate rises and the quantity of dollars exchanged falls. rises and the quantity of dollars exchanged does not change. rises and the quantity of dollars exchanged rises. falls and the quantity of dollars exchanged does not change. If a government has a budget surplus, then public saving is positive and increases national saving. is positive but decreases national saving. is negative and decreases national...
When the expected future price of a good falls, the supply curve shifts to the right...
When the expected future price of a good falls, the supply curve shifts to the right and the demand curve shifts to the left simultaneously. What happens to the equilibrium price after the shifts? What happens to the equilibrium quantity after the shifts? Is it always possible to determine the direction of change in both the equilibrium price and quantity or is more information necessary? Use supply and demand curves to graphically illustrate your answer 7.0.3
20. All else equal, when the Fed purchases government bonds, the money supply curve shifts to...
20. All else equal, when the Fed purchases government bonds, the money supply curve shifts to the ________ and the equilibrium interest rate ________. left; rises right; rises right; falls left; falls
1. When there is a subsidy to consumers, * the demand curve will shift to the...
1. When there is a subsidy to consumers, * the demand curve will shift to the left the demand curve will shift to the right. the demand curve will shift, but the direction depends on relative elasticity. suppliers can expect to be taxed. 2. Which of the following is the great economic problem? * Differentiating shifts from movements Reducing the deficit in a multi-party system Minimizing unemployment in a changing world Satisfying unlimited wants with limited resources 3. On average,...
An increase in money supply shifts the LM curve to the right, but an increase in...
An increase in money supply shifts the LM curve to the right, but an increase in money demand shifts the LM curve to the left. Giving reasons, explain why there is a difference. (150 words maximum)
The Law of Demand implies that ______________________. When the price of a good decreases, the demand...
The Law of Demand implies that ______________________. When the price of a good decreases, the demand curve shifts to the right. The demand curve is negatively sloped. When the price of a good decreases, the demand curve shifts to the left. The demand curve is positively sloped.
2) The Federal Reserve issues a report indicating that future inflation will be higher than had...
2) The Federal Reserve issues a report indicating that future inflation will be higher than had previously seemed likely. As a result A) the supply curve for bonds shifts to the right. B) the demand curve for loanable funds shifts to the left. C) the equilibrium interest rate falls. D) the equilibrium price of bonds rises. Answer: A 7) As a result of higher expected inflation A) the demand and supply curves for bonds both shift to the right and...
What is the effect of an adverse supply shock? a. The long-run aggregate supply curve shifts...
What is the effect of an adverse supply shock? a. The long-run aggregate supply curve shifts to the left. b. The short-run aggregate supply curve shifts to the right. c. The long-run Phillips curve shifts to the left. d. The short-run Phillips curve shifts to the right.
Which of the following statements is correct for a market with an upward-sloping supply curve and...
Which of the following statements is correct for a market with an upward-sloping supply curve and a downward-sloping demand curve? If the supply curve shifts left and demand remains constant, equilibrium quantity will rise. If the supply curve shifts right and the demand curve remains constant, equilibrium price will rise. If the demand curve shifts left and the supply curve shifts right, equilibrium price will rise. If the demand curve shifts right and the supply curve shifts left, equilibrium price...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT