Scenario 3: Unemployment decreases throughout the country causing a dramatic increase in income for millions of Americans. Causing Americans to save more. 1. What is the likely effect of this increase in income on the supply of loanable funds? 2. What effect will this change have on the interest rate? 3. How will this change the behavior of consumers?
Scenario 3: Unemployment decreases throughout the country causing a dramatic increase in income for millions of Americans. Causing Americans to save more. 1. What is the likely effect of this increase in income on the supply of loanable funds? 2. What effect will this change have on the interest rate? 3. How will this change the behavior of consumers?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![Scenario 3: Unemployment decreases throughout the country causing a dramatic increase in
income for millions of Americans. Causing Americans to save more.
1. What is the likely effect of this increase in income on the supply of loanable funds?
2. What effect will this change have on the interest rate?
3. How will this change the behavior of consumers?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe12b799a-9233-4e1c-89e0-9aba5dc283fd%2F99601cb0-2cb0-451f-8302-c9041c1c9798%2F4i151ie_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Scenario 3: Unemployment decreases throughout the country causing a dramatic increase in
income for millions of Americans. Causing Americans to save more.
1. What is the likely effect of this increase in income on the supply of loanable funds?
2. What effect will this change have on the interest rate?
3. How will this change the behavior of consumers?
![Scenario: Country X is currently in a contraction in the business cycle. After months of
contractions the economy enters a recession resulting in people delaying large purchases of
cars and homes.
1. How will this change in consumer behavior likely effect the demand for loanable funds?
2. How will this change in the demand for loanable funds likely effect the interest rate in
the short-run?
3. How will this change in the interest rate likely change the behavior of consumers in the
long-run?
4. How will this change in consumer behavior likely effect the business cycle in the long-
run? Explain your reasoning.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe12b799a-9233-4e1c-89e0-9aba5dc283fd%2F99601cb0-2cb0-451f-8302-c9041c1c9798%2Fvfho0f_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Scenario: Country X is currently in a contraction in the business cycle. After months of
contractions the economy enters a recession resulting in people delaying large purchases of
cars and homes.
1. How will this change in consumer behavior likely effect the demand for loanable funds?
2. How will this change in the demand for loanable funds likely effect the interest rate in
the short-run?
3. How will this change in the interest rate likely change the behavior of consumers in the
long-run?
4. How will this change in consumer behavior likely effect the business cycle in the long-
run? Explain your reasoning.
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