The supply of loanable funds (the source of funds) consists of
Question 1 options:
|
|||
|
|||
|
|||
|
Question 2 (1 point)
Saved
Assuming all else held constant, an increase in net exports will lead to
Question 2 options:
|
|||
|
|||
|
|||
|
|||
|
Question 3 (1 point)
The demand for loanable funds (the use of funds) line is downward sloping because
Question 3 options:
|
|||
|
|||
|
|||
|
Question 4 (1 point)
According to the loanable funds model, which of the following will occur if there is an increase in government purchases (G)?
Question 4 options:
|
|||
|
|||
|
|||
|
|||
|
Question 5 (1 point)
Assuming all else held constant, if there is an improvement in business confidence, then we would expect
Question 5 options:
|
|||
|
|||
|
|||
|
(1) (a)
Domestic saving is the supply (fund) of loanable funds.
(2) (e)
Since net exports (NX) equals net capital outflow (NCO), higher NX will increase NCO, so more capital will flow outside the country, lowering the supply of loanable funds. Also, higher NX lowers trade deficit.
(3) (d)
Interest rate and investment are inversely related, and investment is the demand for loanable funds.
(4) (b)
Higher government spending increases the demand for loanable funds. It increases interest rate, thus appreciating domestic currency.
(5) (c)
Higher business confidence increases investment, which increases the demand for loanable funds. Demand curve shifts right, increasing interest rate.
The supply of loanable funds (the source of funds) consists of Question 1 options: a) Total domestic saving a...
In a large open economy, what is the source of the domestic supply of loanable funds? A. Net capital outflow B. National saving and investment C. National saving D. Investment
If disposable income increases, people will decide to ________ saving, the supply of loanable funds will ________ and the real interest rate will ________. A. increase; decrease; rise B. decrease; increase; fall C. decrease; decrease; rise D. increase; increase; fall
5. Macroland’s domestic supply of saving, domestic demand for saving for purposes of capital formation, and supply of net capital inflows are given by the following equations: S = 1500 + 2000r I = 2000 – 4000r KI = -100 + 6000r a) Assuming that the market for saving and investment is in equilibrium, find national saving, capital inflows, domestic investment, and the real interest rate. b) Repeat part (a), assuming that desired national saving declines by 120 at each...
What influences the supply of loanable funds? The supply of loanable funds is influenced by O A. the real interest rate, and as the real interest rate rises, the supply of loanable funds increases O B. expected future income, and the higher a household's expected future income, the smaller is its saving today O c. expected profit OD. a household's wealth, and the greater a household's wealth, the greater is its saving
Saving is o the source of the supply of loanable funds. the source of the demand for loanable funds. not a relevant macroeconomic topic, because it is related to microeconomic decision making by individuals and households. none of the above
14. Consider the open-economy loanable funds model with flexible prices and capital mobility. Suppose that the world consists of a small open economy (we call this domestic) and the rest of the world (we call this foreign). Answer the following questions with the aid of figures where appropriate a. How does an increase in domestic government expenditure affect trade balance and real exchange rate? (2 points] b. How does an increase in foreign government expenditure affect the trade balance and...
Show how a decrease in the supply of loanable funds and an increase in the demand for loanable funds can raise the real interest rate and leave the equilibrium quantity of loanable funds unchanged. Draw a demand for loanable funds curve. Label it DLF0. Draw a supply of loanable funds curve. Label it SLF0. Draw a point at the equilibrium real interest rate and quantity of loanable funds. Label it 1. Now draw a curve that shows an increase in...
Demand Supply Supply INTEREST RATE (Percent) Demand LOANABLE FUNDS (Billions of dollars) Scenario 1: Individual Retirement Accounts (IRAs) allow people to shelter some of their income from taxation. Suppose the maximum annual contribution to such accounts is $5,000 per person. Now suppose there is an increase in the maximum contribution, from $5,000 to $8,000 per year. Shift the appropriate curve on the graph to reflect this change. and the level of This change in the tax treatment of saving causes...
Supply Demand Supply INTEREST RATE (Percent) Demand LOANABLE FUNDS (Billions of dollars) Scenario 1: Individual Retirement Accounts (IRAS) allow people to shelter some of their income from taxation. Suppose the maximum annual contribution to such accounts is $5,000 per person. Now suppose there is a decrease in the maximum contribution, from $5,000 to $3,000 per year. Shift the appropriate curve on the graph to reflect this change. and the This change in the tax treatment of interest income from saving...
22) Which of the following would not increase the supply curve of loanable funds? A) A Federal Reserve purchase does of U.S. Government securities from commercial banks. B) A higher interest rate. C) An increase in the nation's real income D) All of the above shift the supply. 23) In Keynes's liquidity preference framework, A) the demand for bonds must equal the supply of money B) the demand for money must equal the supply of bonds. C) an excess demand...