assume congress passes legislation that will encourage individual to save more. which curve is affected ?...
Homework Answers
If the congress passes a law that increases the saving more in the market then that will shift the supply of the loanable fund in the market to the right, that will lead to a higher saving and lower interest rate, The new equilibrium will be at a lower interest rate and higher quantity in the loanable fund market.
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assume congress passes legislation that will encourage individual
to save more. which curve is affected ?...
6.For an economy that engages in international trade, GDP is divided into four components. Which of...
6.For an economy that engages in international trade, GDP is divided into four components. Which of the following items is not one of those components? a. Consumption. b. Taxes. c. Government purchases. d. Net exports. 7. The slope of the demand for loanable funds curve represents the a. positive relation between the real interest rate and investment. b. negative relation between the real interest rate and investment c. positive relation between the real interest rate and saving d. negative relation...
Interest Rate SAQ, QO Quantity of Loanable Funds Refer to the market for loanable funds, as...
Interest Rate SAQ, QO Quantity of Loanable Funds Refer to the market for loanable funds, as shown in the above graph. Suppose the market for loanable funds is originally in equilibrium at interest rate lo and quantity 20. In the next period, the equilibrium interest rate increases to ly and quantity decreases to Q1. Which of the following could be the cause of this shift? Investors become more optimistic Households decide to save more Households decide to save less Investors...
Show how a decrease in the supply of loanable funds and an increase in the demand...
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...
QUESTION 9 Interest nate $100 Quantity of loanable funds (billions of dollars) curve to the In...
QUESTION 9 Interest nate $100 Quantity of loanable funds (billions of dollars) curve to the In the Loanable Funds diagram (shown), a decrease in savings by the private sector will shift the 4. causing the equilibrium interest rate to
Using the three-panel diagram, illustrate what happens in the US economy if consumers save more money...
Using the three-panel diagram, illustrate what happens in the US
economy if consumers save more money than they otherwise would
have. This will shift curve (b)—the supply curve in the market for
loanable funds. What happens to the interest rate? The amount of
funds loaned? Net Capital Outflow? Net Exports? The real exchange
rate?
ir (a) Qlot loorable NCO funds) Q( of dollars)
Assume that the market for loanble funds is in equilibrium and that the federal government budget...
Assume that the market for loanble funds is in equilibrium and that the federal government budget is balanced. Now assume that the federal government begins to run a budget deficit (G > T). Does this shift the supply or demand for loanable funds? Why? What happens to the real interest rate? What happens to the quantity of loanable funds? What is the resulting impact on investment in the economy? What is this called?
Question 10 Many states do have which impose an upper limit on the interest rate that...
Question 10 Many states do have which impose an upper limit on the interest rate that lenders can charge. price ceiling laws usury laws price floor laws minimum interest rate Question 7 Real interest 1.5 20 Loane fund t 25 30 ons of 2009 dolar) The figure above shows the loanable funds market. If the real interest rate is 2 percent, then there will be government intervention in the market to make sure there is no credit crisis. there will...
Does a change in the real interest rate shift the supply of loanable funds curve? Explain...
Does a change in the real interest rate shift the supply of loanable funds curve? Explain your answer. How does a currency drain affect the money multiplier? What are the two channels through which the world economy can affect U.S. aggregate demand? State what changes in the world economy can increase U.S. aggregate demand.
The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow.
5. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (Note: You will not be graded on any changes you make to the graph.) Scenario 1: Individual Retirement Accounts (IRAs) allow people to...
4. Assume that the equilibrium in the loanable funds market is at interest rate of 1.25%...
4. Assume that the equilibrium in the loanable funds market is at interest rate of 1.25% and quantity of funds at $20 billion. Suppose the current government deficit is zero so government is not borrowing any money. a) Suppose now government increases spending by $2 billion and finances it entirely by borrowing. This deficit increases equilibrium interest rate to 2% and equilibrium quantity of funds to $21.5. Show the changes on the graph. b) What happens to private investment (I)...
6.For an economy that engages in international trade, GDP is divided into four components. Which of the following items is not one of those components? a. Consumption. b. Taxes. c. Government purchases. d. Net exports. 7. The slope of the demand for loanable funds curve represents the a. positive relation between the real interest rate and investment. b. negative relation between the real interest rate and investment c. positive relation between the real interest rate and saving d. negative relation...
Interest Rate SAQ, QO Quantity of Loanable Funds Refer to the market for loanable funds, as shown in the above graph. Suppose the market for loanable funds is originally in equilibrium at interest rate lo and quantity 20. In the next period, the equilibrium interest rate increases to ly and quantity decreases to Q1. Which of the following could be the cause of this shift? Investors become more optimistic Households decide to save more Households decide to save less Investors...
QUESTION 9 Interest nate $100 Quantity of loanable funds (billions of dollars) curve to the In the Loanable Funds diagram (shown), a decrease in savings by the private sector will shift the 4. causing the equilibrium interest rate to
Using the three-panel diagram, illustrate what happens in the US
economy if consumers save more money than they otherwise would
have. This will shift curve (b)—the supply curve in the market for
loanable funds. What happens to the interest rate? The amount of
funds loaned? Net Capital Outflow? Net Exports? The real exchange
rate?
ir (a) Qlot loorable NCO funds) Q( of dollars)
Question 10 Many states do have which impose an upper limit on the interest rate that lenders can charge. price ceiling laws usury laws price floor laws minimum interest rate Question 7 Real interest 1.5 20 Loane fund t 25 30 ons of 2009 dolar) The figure above shows the loanable funds market. If the real interest rate is 2 percent, then there will be government intervention in the market to make sure there is no credit crisis. there will...
Does a change in the real interest rate shift the supply of loanable funds curve? Explain your answer. How does a currency drain affect the money multiplier? What are the two channels through which the world economy can affect U.S. aggregate demand? State what changes in the world economy can increase U.S. aggregate demand.
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