If there is an increase in the government budget deficit: A/ the demand for loan

Question

If there is an increase in the government budget deficit:
A/ the demand for loanable funds will increase, interest rates will increase, and the amount of borrowing will increase.
B/ the demand for loanable funds will decrease, interest rates will decrease, and the amount of borrowing will decrease.
C/ the supply of loanable funds will increase, interest rates will decrease, and the amount of borrowing will increase.
D/ the supply of loanable funds will decrease, interest rates will increase, and the amount of borrowing will decrease.

Explanation / Answer

C

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