What Is Investment Guru?

Saving,Investment, and the Financial System?

• . An increase in the budget deficit will raise the real interest rate and decrease the quantity of loanable funds demanded for investment. raise the real interest rate and increase the quantity of loanable funds demanded for investment. lower the real interest rate and decrease the quantity of loanable funds demanded for investment. lower the real interest rate and increase the quantity of loanable funds demanded for investment. If the supply of loanable funds is very inelastic (steep), which policy would likely increase saving and investment the most? an increase in the budget deficit none of these answers an investment tax credit a reduction in the budget deficit An increase in the budget deficit is a decrease in public saving. an increase in private saving. a decrease in private saving. none of these answers. an increase in public saving. If an increase in the budget deficit reduces national saving and investment, we have witnessed a demonstration of equity finance. crowding out. the mutual fund effect. intermediation. If Americans become less concerned with the future and save less at each real interest rate, real interest rates rise and investment rises. real interest rates fall and investment rises. real interest rates fall and investment falls. real interest rates rise and investment falls. If the government increases investment tax credits and reduces taxes on the return to saving at the same time, the real interest rate should not change. the real interest rate should rise. the real interest rate should fall. the impact on the real interest rate is indeterminate. An increase in the budget surplus shifts the supply of loanable funds to the left and increases the real interest rate. shifts the demand for loanable funds to the left and reduces the real interest rate. shifts the supply of loanable funds to the right and reduces the real interest rate. shifts the demand for loanable funds to the right and increases the real interest rate.

• Answer:

  You want someone to do your multiple choice for you?! Increased deficit raises the real interest rate and lowers the funds available.