a. The supply of loanable funds slopes upward becauseO 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 becauseO 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.

a. Savers will make more funds available at higher interest rates. Savings is the source of supply…

Answered: a. The supply of loanable funds slopes…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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One of the benefits financial capital markets offer savers is the opportunity to earn income. a. Savers earn income in the form of purchasing b. Savers earn income in the form of through partial ownership of a corporations that they acquire by by lending money to corporations when they purchase
Define the term the concept of return on investment?
The following table contains data on the relationship between saving and income. a. Rearrange the income and saving data into an ascending order of income and graph them on the accompanying grid. Income per Year $ Saving per Year 15,000 $ 0 10,000 5,000 20,000 1,000 -500 500 0 1,500 Rearranged Rearranged Income per Year Saving per Year
Figure 32-1 percent 8 10 20 30 40 50 60 70 $billions Refer to Figure 32-1. In the Figure shown, if the real interest rate is 6 percent, the quantity of loanable funds demanded is O A. $20 billion, and the quantity supplied is $40 billion. O B. $20 billion, and the quantity supplied is $60 billion. O C. $60 billion, and the quantity supplied is $20 billion. O D. $60 billion, and the quantity supplied is $40 billion.
Suppose government budget requires the government to sell $30 billion bonds to the public. A. Use supply-demand diagram to analyze the impact on interest rate and investment. Explain the effect in words. B. Answer (a) assuming that the supply of loanable funds in perfectly inelastic.
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.
Assume there are no investment projects in the economy that yield an expected rate of return of 25 percent or more. But suppose there are $10 billion of investment projects yielding expected returns of between 20 and 25 percent; another $10 billion yielding between 15 and 20 percent; another $10 billion yielding between 10 and 15 percent; and so forth. a. Cumulate these data and present them graphically using the graph below, putting the expected rate of return (and the real interest rate) on the vertical axis and the amount of investment on the horizontal axis. Instructions: Use the tool provided 'ID' to plot the investment demand curve (plot 6 points total). 30 Tools ID 20 15 10 10 20 30 40 50 60 Investment (billions of dollars) Instructions: Enter your answers as a whole number. b. What will be the equilibrium level of aggregate investment if the real interest rate is: 15 percent: $ billion 10 percent: $ billion 5 percent: $ billion Expected rate of return, percent 25
Fill-in the correct answer. p i π rr Qtr 1 0.05 0.06 0.03 Qtr 2 0.03 0.07 0.03 Qtr 3 0.02 0.08 0.03 Qtr 4 0.04 0.05 0.03 "_________" Calculate the annual realized real rate of interest."_________" Find the rate of risk."_________" Find the inflation-adjusted principal.
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If Japan goes from a small budget deficit to a large budget deficit, it will reduce A. public saving and so shift the supply of loanable funds left. B. None of the above is correct. C. investment and so shift the demand for loanable funds left. D. private saving and so shift the supply of loanable funds left.
8 Demand, Supply 7 10 4 REAL INTEREST RATE (Percent) 3 2 - 10 20 30 40 50 60 70 80 QUANTITY OF LOANABLE FUNDS (Billions of dollars) Refer to Figure 33-1. If the real interest rate is 3 percent, the quantity of loanable funds demanded is $50 billion, and the quantity supplied is $30 billion. $20 billion, and the quantity supplied is $60 billion. $50 billion, and the quantity supplied is $60 billion. $30 billion, and the quantity supplied is $50 billion.
Why, other things remaining the same, does a rise in the real interest rate decrease the quantity of loanable funds demanded? The quantity of loanable funds demanded decreases because at a higher interest rate _______. A. fewer projects have an expected rate of profit below the real interest rate B. more projects have an expected rate of profit that exceeds the real interest rate C. banks want to lend more D. fewer projects have an expected rate of profit that exceeds the real interest rate

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