Money demand shifts right when:

An increase in demand for loanable funds due to government borrowing raises the equilibrium interest rate. As the government competes with private borrowers for available funds, lenders will demand higher rates of return, thus increasing the real interest rate in the economy.

A decrease in demand for loanable funds would imply that fewer borrowers are seeking loans. However, a government deficit typically results in higher borrowing needs, contradicting the notion that demand would decrease. Therefore, this option does not accurately reflect the impact of a government deficit on the loanable funds market.

While the Federal Reserve can influence interest rates through monetary policy, the immediate effect of a government deficit on the loanable funds market is an increase in demand, which typically leads to higher interest rates regardless of Fed actions. Thus, this option fails to recognize the direct relationship between government deficits and demand for loanable funds.