• Draw a correctly labeled graph of the loanable funds market. Label the equilibrium interest rate r1 and the quantity of loanable funds Qlf1. There is a figure in your textbook that you can use as a guide • Suppose the government borrows money to finance additional government spending. Which curve will be affected by the increased government borrowing and which direction will the curve shift? Show the effect on your graph above and label the new equilibrium quantity Qlf2 and the new equilibrium interest rate r2.

• Draw a correctly labeled graph of the loanable funds market. Label the equilibrium interest rate r1 and the quantity of loanable funds Qlf1. There is a figure in your textbook that you can use as a guide • Suppose the government borrows money to finance additional government spending. Which curve will be affected by the increased government borrowing and which direction will the curve shift? Show the effect on your graph above and label the new equilibrium quantity Qlf2 and the new equilibrium interest rate r2.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The graph below represents the market for loanable funds for an economy. Use the graph to answer the following questions. real interest rate 6% 51000 Loanable fund $ Assume there currently is a surplus in the market for loanable funds. The current real interest rate is I Select) the equilibrium real interest rate. As the market moves to the equilibrium real interest rate we expect I Select ] Demand for loanable funds comes from the activities of ISelect) 13
Macmillan Learning U The graph depicts the market for loanable funds. Shift the appropriate curves to indicate what will happen to the market if there is an improvement in the technology firms use in production. As a result of this change, the real interest rate is now % Real interest rate 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 and the quantity of funds is $ billion. 0.5 Supply Demand 0.0 0 5 10 15 20 25 30 35 40 45 50 Loanable funds (in billions)
Suppose government provides tax rebate to small business on their business-related expenditure. Assuming no change in government budgetary position, this policy is likely to have a positive effect on household (or private) saving in the economy (Hint: think about the effect of this policy in Loanable Funds Market) Is this statement true, false or uncertain? Please provide your explaination.
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I need help in solving this problem.
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