1. The supply and demand for loanable funds Which of the following is one of the reasons that the demand curve for loanable funds is downward sloping? OA lower real interest rate makes borrowing less expensive. O A higher real interest rate encourages domestic investors to purchase foreign securities and discourages foreign investors from purchasing their own securities. O A higher real interest rate encourages people to save. O A lower real interest rate discourages people from saving. Which of the following is one of the reasons that the supply curve for loanable funds is upward sloping? OA lower real interest rate encourages domestic consumers to purchase foreign securities and discourages foreigners from purchasing domestic securities. O A higher real interest rate makes borrowing less expensive. OA lower real interest rate makes saving less appealing. OA lower interest rate makes borrowing less expensive.

1. The supply and demand for loanable funds Which of the following is one of the reasons that the demand curve for loanable funds is downward sloping? OA lower real interest rate makes borrowing less expensive. O A higher real interest rate encourages domestic investors to purchase foreign securities and discourages foreign investors from purchasing their own securities. O A higher real interest rate encourages people to save. O A lower real interest rate discourages people from saving. Which of the following is one of the reasons that the supply curve for loanable funds is upward sloping? OA lower real interest rate encourages domestic consumers to purchase foreign securities and discourages foreigners from purchasing domestic securities. O A higher real interest rate makes borrowing less expensive. OA lower real interest rate makes saving less appealing. OA lower interest rate makes borrowing less expensive.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. If at a given real interest rate desired national saving is $120 billion, domestic investment is $84 billion, and net capital outflow is $56 billion, then at that real interest rate in the loanable funds market there is a a. surplus. The real interest rate will fall. b. shortage. The real interest rate will fall. c. shortage. The real interest rate will rise. d. surplus. The real interest rate will rise.
Q: Draw a graph depicting the market for loanable funds and analyze the impact of open market operations when the interest rate is at or near the zero lower bound. a. Illustrate the supply and dem and for loanable funds, labeling the supply curve (S), the demand curve (D), and the initial equilibrium interest rate and quantity of loanable funds. b. Show the effect of open market operations on the supply of loanable funds, and analyze its impact on the price of loanable funds.c. Introduce a situation in which the market for loanable funds faces the zero lower bound (it may be easiest to draw a new graph for this for the purpose of clarity). d. Explain how open market operations typically influence the supply of loanable funds and interest rates in normal circumstances. e. Discuss why these operations become less effective when the interest rate is at or near the zero lower bound.
country has domestic investment of $200 billion. Its citizens purchase $600 billion of foreign assets and foreign citizens purchase $300 billion of its assets. What is national saving? a. $500 billion b. $400 billion c. $800 billion d. $600 billtion
Which of the following is one of the reasons that the demand curve for loanable funds is downward sloping? A lower real interest rate discourages domestic investors from purchasing foreign securities and encourages foreign investors to purchase domestic securities. A higher real interest rate encourages people to save. OA lower real interest rate discourages people from saving. OA higher real interest rate makes borrowing more expensive, Which of the following is one of the reasons that the supply curve for loanable funds is upward sloping? A higher real interest rate makes borrowing less expensive. OA lower interest rate makes borrowing less expensive. OA lower real interest rate encourages domestic consumers to purchase foreign securities and discourages foreigners from purchasing domestic securities. A lower real interest rate makes saving less appealing.
C wrong
During the financial crisis it was proposed that firms be provided with a tax credit for investment projects. Such a tax credit would shift: a. the demand for loanable funds left and shift the supply of dollars in the market for foreign-currency exchange right. b. both the demand for loanable funds and the supply of dollars in the market for foreign-currency exchange right. c. both the demand for loanable funds and the supply of dollars in the market for foreign-currency exchange left. d. the demand for loanable funds right and shift the supply of dollars in the market for foreign-currency exchange left.
4. Suppose gross saving in the United States is 20 percent of Gross National Product (GNP). a. If business saving is 15 percent of GNP and government saving is 4 percent of GNP, what percent of GNP is personal saving?b. Explain why a federal budget surplus increases national saving while a budget deficit decreases national saving.c. How can a federal budget deficit increase market equilibrium interest rates and reduce private investment and future economic growth?
4.5
If at a given real interest rate desired national saving is $115 billion, domestic investment is $60 billion, and net capital outflow is $40 billion, then at that real interest rate in the loanable funds market there is a A. surplus. The real interest rate will fall. B. surplus. The real interest rate will rise. C. shortage. The real interest rate will rise. D. shortage. The real interest rate will fall.
28. An increase in national saving will cause real interest rate and investment spending to change in which of the following ways? A. B. C. D. E. Real Interest Rate Increase Increase Increase Decrease Decrease Nominal Interest Rate 7%³ z%¹ Sp3 Investment Increase Decrease Not change Increase Not change Sp T Q³ Q¹ D Quantity of Money
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