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bachelor in business administration
Polytechnic State University Sanluis
Jan-2006 - Nov-2010
CPA
Polytechnic State University
Jan-2012 - Nov-2016
Professor
Harvard Square Academy (HS2)
Mar-2012 - Present
2.15 The federal government in the United States has been running large budget deficits.
a. Use a market for loanable funds graph to illustrate the effect of the federal budget deficits. What happens to
the equilibrium real interest rate and the quantity of loanable funds? What happens to the level of saving and investment?
b. Now suppose that households believe that deficits will be financed by higher taxes in the near future, and
households increase their saving in anticipation of paying those higher taxes. Briefly explain how your analysis
in part (a) will be affected.
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