The Above Table Has the Private Demand for Loanable Funds

question 51

Multiple Choice

$\begin{array} { c c c } \hline &\text { Demand for loanable funds }&\text { Supply of loanable funds }\\\text { Real interest rate } & \text { (billions of } & \text { (billions of } \\\text { (percent per year) } & \text { 2005 dollars) } & 2005 \text { dollars) } \\\hline 3 & 750 & 450 \\4 & 700 & 500 \\5 & 650 & 550 \\6 & 600 & 600 \\7 & 550 & 650 \\8 & 500 & 700 \\9 & 450 & 750 \\\hline\end{array}$


The above table has the private demand for loanable funds and the private supply of loanablefunds schedules.
- If the government budget surplus is $200 billion, and there is a Ricardo-Barro effect, the equilibrium real interest rate is_{--------------------} and the equilibrium quantity of loanable funds is _{--------------------}.

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