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Use the following to answer question 40 Figure Market for Loanable Funds III Interest rate...

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Use the following to answer question 40 Figure Market for Loanable Funds III Interest rate 30 27 24 21 18 10 5 15 12 9 6 3 0 200 400 E S D 600 800 1 000 1 200 Quantity of loanable funds billions of dollars A fall to 12 B rise to 16 5 C rise to 18 40 Figure Market for Loanable Funds III If the government in a closed economy is running a budget balance of zero when it decides to increase defense spending by billion and then finances the spending by selling bonds the equilibrium interest rat will

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