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Refer to the figure (graph below) which shows the loanable funds market where (Ir) represents the real interest rate (the vertical axis) and (QLF) represents the quantity of loanable funds avalable in the market (the horizontal axis). The demand for loanable funds is given by (DLF) while the supply of loanable funds is reflected in (SLF). In the graph below Ir1 and Q1 represent the original equilibrium in the market for loanable funds. Suppose the U.S. economy is expected to contract and consumers fear a spike in the unemployment rate and are therefore fearful regarding the future of the U.S. economy. How will this event impact the loanable funds market? Loanable Funds Market Ir Ir1 Q1 SLF DLF QLF Demand (DLF) increases, interest rates increase, and Q increases Demand (DLF) decreases, interest rates decrease, and Q decreases Demand (DLF) decreases, interest rates unchanged, and Q unchanged Demand (DLF) unchanged, interest rates decrease, and Q increases

Refer to the figure (graph below) which shows the loanable funds market where (Ir) represents the real interest rate (the vertical axis) and (QLF) represents the quantity of loanable funds avalable in the market (the horizontal axis). The demand for loanable funds is given by (DLF) while the supply of loanable funds is reflected in (SLF). In the graph below Ir1 and Q1 represent the original equilibrium in the market for loanable funds. Suppose the U.S. economy is expected to contract and consumers fear a spike in the unemployment rate and are therefore fearful regarding the future of the U.S. economy. How will this event impact the loanable funds market? Loanable Funds Market Ir Ir1 Q1 SLF DLF QLF Demand (DLF) increases, interest rates increase, and Q increases Demand (DLF) decreases, interest rates decrease, and Q decreases Demand (DLF) decreases, interest rates unchanged, and Q unchanged Demand (DLF) unchanged, interest rates decrease, and Q increases

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Refer to the figure (graph below) which shows the loanable funds market where (Ir) represents the real interest rate (the vertical axis) and (QLF) represents the quantity of loanable funds avalable in the market (the horizontal axis). The demand for loanable funds is given by (DLF) while the supply of loanable funds is reflected in (SLF). In the graph below Ir1 and Q1 represent the original equilibrium in the market for loanable funds. Suppose the U.S. economy is expected to contract and consumers fear a spike in the unemployment rate and are therefore fearful regarding the future of the U.S. economy. How will this event impact the loanable funds market? Loanable Funds Market Ir Ir1 Q1 SLF DLF QLF Demand (DLF) increases, interest rates increase, and Q increases Demand (DLF) decreases, interest rates decrease, and Q decreases Demand (DLF) decreases, interest rates unchanged, and Q unchanged Demand (DLF) unchanged, interest rates decrease, and Q increases
Transcribed Image Text:Refer to the figure (graph below) which shows the loanable funds market where (Ir) represents the real interest rate (the vertical axis) and (QLF) represents the quantity of loanable funds avalable in the market (the horizontal axis). The demand for loanable funds is given by (DLF) while the supply of loanable funds is reflected in (SLF). In the graph below Ir1 and Q1 represent the original equilibrium in the market for loanable funds. Suppose the U.S. economy is expected to contract and consumers fear a spike in the unemployment rate and are therefore fearful regarding the future of the U.S. economy. How will this event impact the loanable funds market? Loanable Funds Market Ir Ir1 Q1 SLF DLF QLF Demand (DLF) increases, interest rates increase, and Q increases Demand (DLF) decreases, interest rates decrease, and Q decreases Demand (DLF) decreases, interest rates unchanged, and Q unchanged Demand (DLF) unchanged, interest rates decrease, and Q increases
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