Scenario 1 Consider an overlapping generations model with 100 lenders and 121 borrowers born in every period. Everyone lives for only two periods. Each lender is endowed with 20 goods when young and nothing when old. Each borrower is endowed with nothing when young and 10 goods when old. Let r be the gross real interest rate on private loans. Also, assume there is na fiat money or capital. Let cu be the consumtion in period i-1.2 for lenders and ca be the consumption in the period i-1,2 for the borrowers. Also, let / be amount of goods lent and let b the amount of goods borrowed. Refer to Scenario 1. Suppose lenders want to save 10r each and borrowers want to borrow 10/r each. At the market clearing r, what is the total amount lent and borrowed? O 10 900 O 1100 O 1000

Anna has an income of $1000 this year, and she expects an income of $2500next year. She can borrow and lend money at an interest rate of 10%.Consumption goods cost $1 per unit this year and there is no inflation. What is the net present value of Anna’s endowment?

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?

Would you expect capital deepening to result in diminished1etmns? Why or why not? Would you expect improvements in technology to result in diminished returns? Why or why not?

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a) although a govenment adobts various mnetary policies to manage financial stability to achieve aconomic growth, there are some factors thatcould undermine he effectiveness of these polies". discuss any three of these factors.

This refers to an income instrument that represents a loan by an investor to a borrower. O A. Stock О В. Вond O C. Inflation O D. Interest

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.

1. Assume that the loanable funds market in country X is currently in equilibrim represented by thegraph of the loanable funds where interest rate is r1 and Quantity of loanable funds as Q1. Assume that, government of Country X, which had a balanced budged now increased their spendingwhile the taxes are constant.GDP = 1,000 million BDT G = 100 million BDT C = 850 million BDTX = 100 million BDT T = 50 million BDT M = 125 million BDTA) What is the level of investment spending and private savings? B) What are amounts of budget balance (deficit/surplus) and net capital inflow? [Hint: net capitalinflow equals the value of imports (M) minus the value of exports (X)] Assume that the government funds the increase in spending through increased borrowingC) What will be the impact of the policy action on the interest rate and quantity of loanable funds?Draw correctly labeled graph D) Given your answer, how will the private sector be affected? Is there any “crowding out”?Explain. (Take help of…