Refer to the following graph to answer the next six questions. Interest rate 6% Line 1 4% Line 2 $200 $250 $300 Savings and investment (billions of dollars) In the graph, at an interest rate of 5%, the Oa) demand for loanable funds is greater than the supply of loanable funds, and there is a shortage of loanable funds. Ob) quantity demanded of loanable funds is greater than the quantity supplied of loanable funds, and there is a shortage of loanable funds. ic) quantity demanded of loanable funds is greater than the quantity supplied of loanable funds, and there is a surplus of loanable funds. d) O d) quantity demanded of loanable funds is less than the quantity supplied of loanable funds, and there is a surplus of loanable funds. e) quantity demanded of loanable funds equals the quantity supplied of loanable funds, and equilibrium is reached.

Refer to the following graph to answer the next six questions. Interest rate 6% Line 1 4% Line 2 $200 $250 $300 Savings and investment (billions of dollars) In the graph, at an interest rate of 5%, the Oa) demand for loanable funds is greater than the supply of loanable funds, and there is a shortage of loanable funds. Ob) quantity demanded of loanable funds is greater than the quantity supplied of loanable funds, and there is a shortage of loanable funds. ic) quantity demanded of loanable funds is greater than the quantity supplied of loanable funds, and there is a surplus of loanable funds. d) O d) quantity demanded of loanable funds is less than the quantity supplied of loanable funds, and there is a surplus of loanable funds. e) quantity demanded of loanable funds equals the quantity supplied of loanable funds, and equilibrium is reached.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter21: Financial Markets, Saving, And Investment

Section: Chapter Questions

Problem 9P

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Figure 32-1 REAL INTEREST RATE (Percent) 8 7 50 5 4 3 N Demand Supply 10 20 30 40 50 60 70 80 QUANTITY OF LOANABLE FUNDS (Billions of dollars) Refer to Figure 32-1. If the real interest rate is 7 percent, the quantity of loanable funds demanded is O $70 billion, and the quantity supplied is $10 billion. $10 billion, and the quantity supplied is $70 billion. O $10 billion, and the quantity supplied is $10 billion. O $70 billion, and the quantity supplied is $10 billion.
Interest 6% lonable fund is 4trillion. Suppose there was a change in the tax laws to encourage savers to save more and as a result, assume the equilibrium interest rate falls by 2 % point. By how much the equilibrium loanable funds saved and invested would rise or fall?
Answer plzz...
1. Suppose the government borrows $20 million more next year than this year. a. How does the elasticity of the supply of loanable funds affect the size of thesechanges? b. How does the elasticity of the demand of loanable funds affect the size of thesechanges?
Suppose the market for loanable funds is currently in equilibrium. Which of the following factors will cause an increase in the interest rate? Select one: O a. An increase in the household saving rate O b. An expansionary monetary policy Oc. An increase in business confidence O d. A decrease in government budget deficits Travis buys a 20-year, $10,000 US Treasury bond with a coupon rate of 5%. After three years, he has some unexpected expenses and decides to sell the bond. In which market will Travis sell his bond? Select one: O a. The secondary bond market O b. The primary bond market O c. The Treasury bond market Od. The T-bond market
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Suppose the government runs fewer budget deficit and there is a decrease in the average household income. Then, O The new EQ quantity of loanable funds would be indeterminate, , but the new EQ interest rate would increase. O The new EQ quantity of loanable funds would decrease, but the new EQ interest rate would be indeterminate. O The new EQ quantity of loanable funds would be indeterminate, , but the new EQ interest rate would decrease. The new EQ quantity of loanable funds would be indeterminate, but the new EQ interest rate would increase. The new EQ quantity of loanable funds would increase, but the new EQ interest rate would be indeterminate.
Question 4 Suppose congress pass a law that offers a tax credit for firms that built new factories in the U.S. Then the O a. supply of loanable funds would shift rightward, initially creating a shortage of loanable funds at the original interest rate. O b. demand for loanable funds would shift rightward, initially creating a shortage of loanable funds at the original interest rate. O c. demand for loanable funds would shift rightward, initially creating a surplus of loanable funds at the original interest rate. O d. supply of loanable funds would shift rightward, initially creating a surplus of loanable funds at the original interest rate.
Interest Rate 0 Multiple Choice O O A O S₁ BC Quantity Refer to the diagram. Suppose that the demand for loanable funds is D₁ and the supply of loanable funds initially is S₁. If the supply of loanable funds increases to So, the equilibrium quantity of funds borrowed will increase from E to F. increase from A to B. increase from B to C. So decrease from G to F. Do D₁
QUESTION 9 Use the following diagram to answer this question The accompanying graph shows the market for loanable funds in equilibrium. Interest rate (%) 12 10 8 6 4 0 XH 2 3 E 4 6 5 Quantity of loanable funds (trillions of dollars) S Which of the following might produce a new equilibrium interest rate of 2% and a new equilibrium quantity of loanable funds of $5 trillion? OA. Firms become pessimistic about the future and, as a result, they cut back on their plans to buy new equipment and build new factories. ⒸB. Congress decreases the tax rate on interest income. C. Capital inflows from foreign citizens are declining. D. The U.S. government offers a tax credit for firms that built new factories in the U.S.
Refer to the figure below to answer the following questions. Real interest rate (percent per year) 10 DLF 150 300 450 600 750 900 Loanoble funds (billions of 2007 dollars) Figure 7.2.3 In Figure 7.23, when the real interest rate is 6 percent, the quantity of loanable funds demanded is Select one: O A $150 billion. O B. $450 billion. O C $600 billion. O D. $300 billion. O E. any amount less than $450 billion.
This figure shows the loanable funds market for a closed economy. INTEREST RATE (Percent) 09 2 E с 50 100 150 LOANABLE FUNDS (Dollars) D₂ o Refer to Figure 26-4. Starting at point A, the enactment of an investment tax credit would likely cause the quantity of loanable funds traded to increase to $150 and the interest rate to rise to 6% (point C). decrease to $50 and the interest rate to fall to 2% (point B). decrease to $50 and the interest rate to rise to 6% (point E). increase to $150 and the interest rate to fall to 2% (point D).