Answer:
C. changes both the supply of and demand for loanable funds.
Explanation:
A budget deficit is when expenses exceed revenue and denotes the financial capability of a country.
In the presence of a deficit, the demand for loanable funds will increase because the government moves towards lending money. Deficits decrease the supply of loanable funds while surpluses increase the supply of loanable funds. So, both supply and demand of loanable funds are affected by budget deficit.
