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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Define the term the concept of return on investment?
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Figure 10-6 Real interest rate 6% 5 4 3 2 1 0 30 Select one: O O O O 60 90 _____ 120 150 a. supply; rise; decreasing; increasing b. supply; fall; increasing; decreasing c. demand; fall; decreasing; decreasing d. demand; rise; increasing; decreasing 180 will Refer to Figure 10-6. The loanable funds market is in equilibrium, as shown in the figure above. As a result of an increase in the government budget deficit, the thereby the equilibrium real interest rate and the equilibrium quantity of loanable funds. S Quantity of loanable funds (millions of dollars) for loanable funds
Which of the following would ↑ the Qd of LF? Select one: O A. expected profit decreases. B. the real interest rate rises. O C. the real interest rate falls. D. the supply of loanable funds decreases. E. wealth increases. Clear my choice
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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.