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- Subject
- Stockseconomics-mcqs › stocks
- Published
- 30 May 2019
- Last updated
- 28 May 2026
What is the effect of an increase in the budget surplus on the market for loanable funds?
Multiple choice question for Stocks. Select an option, then review the explanation below.
Explanation
An increase in the budget surplus means the government is saving more, which adds to the supply of loanable funds. This increase in supply shifts the supply curve to the right, causing the real interest rate to decrease.
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Practice related questions from the same subject.
- 1.What happens to real interest rates and investment if Pakistani citizens become less future-oriented and reduce their savings at every real interest rate?
- 2.What effect does a rise in the budget deficit have on public savings?
- 3.What is the effect of a larger budget deficit on the real interest rate and the demand for loanable funds used for investment?
- 4.Which combination of government policies is most effective in promoting economic growth?
- 5.What does investment primarily refer to?