he loanable funds model suggests that increased government spending, financed by borrowing, will cause business nvestment to and household saving to Select one: O a increase, increase. Ob increase, decrease Oc decrease, increase Od decrease; decrease

he loanable funds model suggests that increased government spending, financed by borrowing, will cause business nvestment to and household saving to Select one: O a increase, increase. Ob increase, decrease Oc decrease, increase Od decrease; decrease

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The loanable funds model suggests that increased government spending, financed by borrowing, will cause business
nvestment to
and household saving to
Select one:
O a increase, increase
Ob
increase; decrease
Oc decrease, increase
Od decrease; decrease

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A country has national saving of $50 billion, government expenditures of $40 billion, domestic investment of $15 billion, and net capital outflow of $65 billion. What is its supply of loanable funds? A. $115 billion B. $50 billion C. $40 billion D. $90 billion
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If there is a surplus of loanable funds, then 1) the quantity demanded is greater than the quantity supplied and the interest rate will rise. 2) the quantity demanded is greater than the quantity supplied and the interest rate will fal. O 3) the quantity supplied is greater than the quantity demanded and the interest rate will rise. 4) the quantity supplied is greater than the quantity demanded and the interest rate will fall.
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