**Market for Loanable Funds in a Closed Economy**This graph illustrates the market for loanable funds in a closed economy. There are two key lines in the graph:1. **Supply of Loanable Funds (Orange Line):** - The supply line is upward-sloping, indicating that as the interest rate increases, the quantity of loanable funds supplied also increases.2. **Demand for Loanable Funds (Blue Line):** - The demand line is downward-sloping, showing that as the interest rate decreases, the quantity of loanable funds demanded increases.**Axes:**- The horizontal axis represents "Loanable Funds" measured in billions of dollars, ranging from 0 to 800.- The vertical axis represents the "Interest Rate" in percent, ranging from 0 to 8%.**Equilibrium Point:**- The graph includes a marked equilibrium point at (400, 4), where the supply and demand curves intersect.- At this point, the interest rate is 4%, and the quantity of loanable funds is 400 billion dollars.- Dashed lines extend from the equilibrium to both axes to highlight these values.This graph provides a basic model illustrating how loanable funds are distributed in a closed economy based on varying interest rates and existing supply and demand dynamics. The text appears to be from an educational exercise about the loanable funds market and interest rates. The completion of the sentences likely depends on understanding economic principles:1. **[Blank]** is the source of the demand for loanable funds. As the interest rate falls, the quantity of loanable funds demanded **[Blank]**.2. Suppose the interest rate is 4.5%. Based on the previous graph, the quantity of loanable funds supplied is **[Blank]** than the quantity of loans demanded, resulting in a **[Blank]** of loanable funds. This would encourage lenders to **[Blank]** the interest rates they charge, thereby **[Blank]** the quantity of loanable funds supplied and **[Blank]** the quantity of loanable funds demanded, moving the market toward the equilibrium interest rate of **[Blank]%**.The missing words are typically filled in concepts like "investment," "rise," "fall," "increase," "decrease," "greater," "lesser," "shortage," or specific percentage values, based on the context provided by a graph that is not included in the image. The exercise likely involves explaining the relationship between interest rates, supply and demand for loanable funds, and how equilibrium is achieved in the market.

As depicted in the diagram, demand(dd) & supply(ss) of loanable funds is given. The dd for these…

is the source of the demand for loanable funds. As the interest rate falls, the quantity of loanable funds demanded uppose the interest rate is 4.5%. Based on the previous graph, the quantity of loanable funds supplied is than the quantity of loans emanded, resulting in a of loanable funds. This would encourage lenders tov the interest rates they charge, thereby the quantity of loanable funds supplied and the quantity of loanable funds demanded, moving the market toward e equilibrium interest rate of

is the source of the demand for loanable funds. As the interest rate falls, the quantity of loanable funds demanded uppose the interest rate is 4.5%. Based on the previous graph, the quantity of loanable funds supplied is than the quantity of loans emanded, resulting in a of loanable funds. This would encourage lenders tov the interest rates they charge, thereby the quantity of loanable funds supplied and the quantity of loanable funds demanded, moving the market toward e equilibrium interest rate of

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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