Consider a hypothetical open economy. The following table presents data on the relationship between various real interest rates and national saving, domestic investment, and net capital outflow in this economy, where the currency is the U.S. dollar. Assume that the economy is currently experiencing a balanced government budget. Real Interest Rate National Saving Domestic Investment Net Capital Outflow (Percent) (Billions of dollars) (Billions of dollars) (Billions of dollars) 7 50 20 -10 6 45 30 -5 5 40 40 35 50 3 30 60 10 2 25 70 15

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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I am not even sure how to begin this problem, graphing has never been my strong suit.

Given the information in the preceding table, use the blue points (circle symbol) to plot the demand for loanable funds. Next, use the orange points
(square symbol) to plot the supply of loanable funds. Finally, use the black point (cross symbol) to indicate the equilibrium in this market.
Market for Loanable Funds
10
Demand
8
Supply
Equilibrium
2
+
20
40
60
80
100
QUANTITY OF LOANABLE FUNDS
REAL INTEREST RATE
Transcribed Image Text:Given the information in the preceding table, use the blue points (circle symbol) to plot the demand for loanable funds. Next, use the orange points (square symbol) to plot the supply of loanable funds. Finally, use the black point (cross symbol) to indicate the equilibrium in this market. Market for Loanable Funds 10 Demand 8 Supply Equilibrium 2 + 20 40 60 80 100 QUANTITY OF LOANABLE FUNDS REAL INTEREST RATE
Consider a hypothetical open economy. The following table presents data on the relationship between various real interest rates and national saving,
domestic investment, and net capital outflow in this economy, where the currency is the U.S. dollar. Assume that the economy is currently
experiencing a balanced government budget.
Real Interest Rate
National Saving
Domestic Investment
Net Capital Outflow
(Percent)
(Billions of dollars)
(Billions of dollars)
(Billions of dollars)
7
50
20
-10
6.
45
30
-5
5
40
40
4
35
50
5
3
30
60
10
2
25
70
15
LO
Transcribed Image Text:Consider a hypothetical open economy. The following table presents data on the relationship between various real interest rates and national saving, domestic investment, and net capital outflow in this economy, where the currency is the U.S. dollar. Assume that the economy is currently experiencing a balanced government budget. Real Interest Rate National Saving Domestic Investment Net Capital Outflow (Percent) (Billions of dollars) (Billions of dollars) (Billions of dollars) 7 50 20 -10 6. 45 30 -5 5 40 40 4 35 50 5 3 30 60 10 2 25 70 15 LO
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