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Describe what will occur in the loanable funds market

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First, briefly describe the loanable funds market. Next, in the domestic economy the government is running a budget deficit and needs to borrow money. Describe what will occur in the loanable funds market. (Note: what happens to the equilibrium interest rate and equilibrium quantity of loanable funds)? Draw a graph to help answer the question and be sure to provide the intuition behind what is happening and also discuss any interesting observations or outcomes.

Reference no: EM131174353

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