What would be the major effect in market for loanable funds

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Reference no: EM131530150

Suppose the government increases spending on infrastructure but does not increase taxes to pay for it.

What would be the major effect in the market for loanable funds? (choose one and explain why)

Increase in demand for loanable funds (increased supply of bonds)

Decrease in demand for loanable funds (decreased supply of bonds)

Increase in supply of loanable funds (increased demand for bonds)

Decrease in supply of federal funds (decreased demand for bonds)

Why?

Reference no: EM131530150

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