Suppose the government runs fewer budget deficit and there is a decrease in the average household income. Then, The new EQ quantity of loanable funds would be indeterminate,, but the new EQ interest rate would increase. O The new EQ quantity of loanable funds would decrease, but the new EQ interest rate would be indeterminate. O The new EQ quantity of loanable funds would be indeterminate, , but the new EQ interest rate would decrease. The new EQ quantity of loanable funds would be indeterminate, but the new EQ interest rate would increase. The new EQ quantity of loanable funds would increase, but the new EQ interest rate would be indeterminate.

Suppose the government runs fewer budget deficit and there is a decrease in the average household income. Then, The new EQ quantity of loanable funds would be indeterminate,, but the new EQ interest rate would increase. O The new EQ quantity of loanable funds would decrease, but the new EQ interest rate would be indeterminate. O The new EQ quantity of loanable funds would be indeterminate, , but the new EQ interest rate would decrease. The new EQ quantity of loanable funds would be indeterminate, but the new EQ interest rate would increase. The new EQ quantity of loanable funds would increase, but the new EQ interest rate would be indeterminate.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter21: Financial Markets, Saving, And Investment

Section: Chapter Questions

Problem 9P

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Similar questions

According to Table 19.7, how often have recessions occurred since the end of World War II (1945)?
Interest 6% lonable fund is 4trillion. Suppose there was a change in the tax laws to encourage savers to save more and as a result, assume the equilibrium interest rate falls by 2 % point. By how much the equilibrium loanable funds saved and invested would rise or fall?
A government budget deficit occurs, which The real interest rate O A. decreases the supply of loanable funds; falls O B. decreases the supply of loanable funds; rises C. decreases the demand for loanable funds; falls O D. increases the demand for loanable funds; rises
Suppose the market for loanable funds is currently in equilibrium. Which of the following factors will cause an increase in the interest rate? Select one: O a. An increase in the household saving rate O b. An expansionary monetary policy Oc. An increase in business confidence O d. A decrease in government budget deficits Travis buys a 20-year, $10,000 US Treasury bond with a coupon rate of 5%. After three years, he has some unexpected expenses and decides to sell the bond. In which market will Travis sell his bond? Select one: O a. The secondary bond market O b. The primary bond market O c. The Treasury bond market Od. The T-bond market
a. The supply of loanable funds slopes upward because O higher interest rates make it more costly to borrow. O savers will make more funds available at lower interest rates. O investors will want more money made available at higher interest rates. savers will make more funds available at higher interest rates. b. The demand for loanable funds slopes downward because O few investment projects yield a high rate of return. O many investment projects yield an equal.rate of return. O many investment projects yield a high rate of return. O few investment projects yield a low rate of return.
Question 4 Suppose congress pass a law that offers a tax credit for firms that built new factories in the U.S. Then the O a. supply of loanable funds would shift rightward, initially creating a shortage of loanable funds at the original interest rate. O b. demand for loanable funds would shift rightward, initially creating a shortage of loanable funds at the original interest rate. O c. demand for loanable funds would shift rightward, initially creating a surplus of loanable funds at the original interest rate. O d. supply of loanable funds would shift rightward, initially creating a surplus of loanable funds at the original interest rate.
a. The supply of loanable funds slopes upward because O higher interest rates make it more costly to borrow. savers will make more funds available at lower interest rates. O investors will want more money made available at higher interest rates. savers will make more funds available at higher interest rates. b. The demand for loanable funds slopes downward because few investment projects yield a high rate of return. many investment projects yield an equal rate of return. many investment projects yield a high rate of return. O few investment projects yield a low rate of return. c. The equilibrium interest rate is determined where the interest rate is equal to O the amount of loanable funds. O the expected rate of return. O the expected rate of spending. O expected personal income.
Interest Rate 0 Multiple Choice O O A O S₁ BC Quantity Refer to the diagram. Suppose that the demand for loanable funds is D₁ and the supply of loanable funds initially is S₁. If the supply of loanable funds increases to So, the equilibrium quantity of funds borrowed will increase from E to F. increase from A to B. increase from B to C. So decrease from G to F. Do D₁
If the government instituted an investment tax credit, then which of the following would be higher in equilibrium? Use the loanable funds model to answer. O a. Neither the saving nor the interest rate O b. The saving but not the interest rate O c. The saving and the interest rate O d. The interest rate but not the saving
2. is it possible for total saving to fall when people beome more thirfty?
First Call Inc. is a cellular phone company. It plans to build an assembly plant that costs $10 million if the real interest rate is 6% a year. If the real interest rate is 5% a year, First Call Inc. will build a larger plant that costs $12 million. And if he real interest rate is 7% a year, First Call will build a smaller plant that costs $8 million. a. Draw a graph of First Call’s demand for loanable funds curve. b. First Call expects its profit from the sale of cellular phones to double next year. If other things remain the same, explain how this increase in expected profit influence it’s demand for loanable funds
It has been said that a society withhigh savings rate is a society with ahigh standard of living. Discuss thelink (if any) between saving andstandard of living and also explainthe overall economic function ofprofits.