Refer to Figure 5.1 for the Following Questions

question 36

Multiple Choice

Refer to Figure 5.1 for the following questions.
Figure 5.1

-Refer to Figure 5.1. As a result of an increase in the government budget deficit, the ________ for loanable funds will ________, thereby ________ the equilibrium real interest rate and ________ the equilibrium quantity of loanable funds.

• A)demand; rise; increasing; decreasing
• B)supply; rise; decreasing; increasing
• C)demand; fall; decreasing; decreasing
• D)supply; fall; increasing; decreasing

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Definitions:

Unemployment

The situation of being jobless and actively looking for work but unable to find a job.

Classical Macroeconomic Model

An economic theory that emphasizes the importance of classical concepts like full employment, supply and demand, and the self-regulating nature of markets.

Full Employment

A state of the labor market where virtually all individuals who are willing and able to work at prevailing wage rates are employed.

Real GDP

The measure of a country's economic output that has been adjusted for inflation, reflecting the true value of goods and services.