In the figure, the DLF curve is the demand for loanable funds curve and the PDLF curve is the private demand for loanable funds curve. If there is no Ricardo-Barro effect, the figure shows the situation in which the government has a so that the equilibrium real interest rate is equilibrium quantity of investment is Real interest rate (percent per year) 12- 10- and the SLF 8- O A. budget deficit; 6 percent; $1.5 trillion O B. budget deficit; 4 percent; $1 trillion 6- OC. budget surplus; 6 percent; $1.5 trillion O D. budget surplus; 4 percent; $1 trillion 4- O E. balanced budget; 6 percent; $1.5 trillion 2- DLF PDLF 0.5 1.0 1.5 2.0 2.5 3.0 Loanable funds (trillions of 2012 dollars)

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