As a result, when there is a deficit, there will be a greater demand for funds that can be loaned because the government will be in line to borrow money just like everyone else.
The amount of money that can be loaned decreases when there are deficits;The amount of money that can be loaned out grows when there are surpluses.
What drives market shifts in loan able funds?
All Credit, Lending, and Borrowing:The demand for funds that can be loaned will rise when there is an increase in loans, credit, and borrowing by individuals and businesses.We will see a decrease in the demand for funds that can be loaned when there is a reduction in the number of loans, credit, and borrowings made by individuals and businesses.
Savings become less appealing if interest income is taxed.There will be less money saved, which will reduce the amount of money available for loans.
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