If We Were to Change the Interpretation of the Term

question 19

Multiple Choice

If we were to change the interpretation of the term "loanable funds" in such a way that government budget deficits would affect the demand for loanable funds, rather than the supply of loanable funds, then

• A)crowding out would not be a consequence of an increase in the budget deficit.
• B)higher interest rates would not be a consequence of an increase in the budget deficit.
• C)an increase in the budget deficit would cause the demand for loanable funds to decrease.
• D)we would be making only a semantic change in how we analyze the effects of government budget deficits.

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Definitions:

Hobbes

An English philosopher best known for his political philosophy, especially regarding the structure of society and legitimate government authority.

Locke

John Locke was an English philosopher and physician regarded as one of the most influential of Enlightenment thinkers, known for his contributions to political theory and epistemology.

Rousseau

Jean-Jacques Rousseau was a Genevan philosopher, writer, and composer of the 18th century, known for his influential works on philosophy, education, and political theory.

Baseline Principles

Fundamental guidelines or norms that serve as a starting point for further development or evaluation.