The market for loanable funds is in equilibrium. All else equal, the federal government deficit is growing. Describe how this will affect the market for loanable funds, the equilibrium interest rate, and the equilibrium quantity of loanable funds.
The market for loanable funds is in equilibrium. All else equal, the federal government deficit?
- Posted:
- 3+ months ago by Don Holley
- Topics:
- market, federal, government, growing, equal
Details:
Answers (1)
This is not a question, it is an assignment. You are to study the course materials to learn how to assess the given situation and then demonstrate your knowledge by predicting a few things. Nobody can do an assignment for you.
AFAIK, deficit is only possible with unbacked paper currency, which throughout history has always resulted in a collapse within forty years. The USA is now in the 47th year since Nixon abolished gold backing of the USD, and in the tenth year of a slow, noisy collapse, counting from the double top in S&P500 in 2007. The collapse is being "papered over" by creating more and more phony money, possible only because this is the first time in history that money could be created without needing an actual printing press.