Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![**Text Transcription:**
"A rise in the interest rate would cause a [Click to select] on the Demand of Loanable Funds (Investment function)."
**Explanation:**
The text is a part of an interactive educational exercise, likely from an economics lesson related to the market for loanable funds. The section in brackets "[Click to select]" suggests that the exercise involves choosing an option from a dropdown menu. The lesson focuses on understanding the relationship between interest rates and the demand for loanable funds, which is a key component of the investment function in economics.
**Educational Context:**
In the context of loanable funds, when interest rates rise, the cost of borrowing increases, leading to a decrease in the quantity of funds demanded for investments. This is because higher interest rates reduce the profitability of potential investments, causing businesses and individuals to be less inclined to borrow money. The dropdown likely offers options such as "decrease" or "increase" to complete the statement based on this economic principle.
There are no graphs or diagrams present in this image.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe05bad8d-5958-46f2-96be-7a163679db5f%2F1dbb2e52-651b-4584-9bc5-636556535253%2Fqss4i6l_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Text Transcription:**
"A rise in the interest rate would cause a [Click to select] on the Demand of Loanable Funds (Investment function)."
**Explanation:**
The text is a part of an interactive educational exercise, likely from an economics lesson related to the market for loanable funds. The section in brackets "[Click to select]" suggests that the exercise involves choosing an option from a dropdown menu. The lesson focuses on understanding the relationship between interest rates and the demand for loanable funds, which is a key component of the investment function in economics.
**Educational Context:**
In the context of loanable funds, when interest rates rise, the cost of borrowing increases, leading to a decrease in the quantity of funds demanded for investments. This is because higher interest rates reduce the profitability of potential investments, causing businesses and individuals to be less inclined to borrow money. The dropdown likely offers options such as "decrease" or "increase" to complete the statement based on this economic principle.
There are no graphs or diagrams present in this image.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education