Assume that the loanable funds market is in equilibrium, as shown in the graph. If households become concerned about retirement income and spend less, what will happen in this market for loanable funds? O The demand for funds will increase, as will the equilibrium interest rate. O Both the demand for funds and the supply of funds will decrease, with an indeterminate impact on the equilbrium interest rate. O The demand for funds will decrease, and the equilibrium quantity of funds transacted wil decrease below Fo. O Both the demand for funds and the supply of funds wil increase, with an increase in the quantity of funds transacted. O The supply of funds will increase, and the equilibrium interest rate will fal below ro.

Assume that the loanable funds market is in equilibrium, as shown in the graph. If households become concerned about retirement income and spend less, what will happen in this market for loanable funds? O The demand for funds will increase, as will the equilibrium interest rate. O Both the demand for funds and the supply of funds will decrease, with an indeterminate impact on the equilbrium interest rate. O The demand for funds will decrease, and the equilibrium quantity of funds transacted wil decrease below Fo. O Both the demand for funds and the supply of funds wil increase, with an increase in the quantity of funds transacted. O The supply of funds will increase, and the equilibrium interest rate will fal below ro.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section: Chapter Questions

Problem 2DQ

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