### Transcription and Explanation#### Text Transcription:"A rise in the interest rate would cause a move-along downwards in the Demand of Loanable Funds (Investment function)."#### Explanation:This text appears to be a multiple-choice question regarding the effect of interest rates on the demand for loanable funds, shown within a dropdown menu. The options are:1. **Shift inwards**: This would indicate a decrease in demand at every interest rate.2. **Shift outwards**: This would suggest an increase in demand at every interest rate.3. **Move-along upwards**: This would imply movement along the demand curve to a higher interest rate and lower quantity of funds.4. **Move-along downwards**: This indicates a movement along the demand curve to a higher interest rate and lower quantity of loanable funds demanded, which has been selected here as the correct option.#### Concept Explanation:- **Demand of Loanable Funds (Investment Function)**: This is a graphical representation showing how much businesses and individuals wish to borrow at different interest rates. - **Interest Rates**: The cost of borrowing funds. As interest rates rise, the cost of borrowing increases, leading to a decrease in the quantity demanded for loans, hence a "move-along downwards" on the demand curve.This understanding helps explain how changes in monetary policy or market conditions can influence borrowing and investment behavior in an economy.

Economics as a subject is used to study and plan the allocation of scarce resources among humans…

Answered: shift inwards AN shift outwards…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose there are two types of investment in the economy: business fixed investment and residential investment. Suppose that loanable fund market is in equilibrium and the government grants an investment tax credit only for business investment. How does this policy affect the supply and demand for loanable funds, the equilibrium interest rate and equilibrium quantity of loanable funds? Use graph to explain your answer.
Looking at business fixed investment, explain why investment is negatively related to the interest rates.
A stock market boom of 2019 increased wealth by trillions of dollars Explain the effect of this increase in wealth on the equilibrium real interest rate, investment, and saving The graph shows the market for loanable funds. Show the effect of a stock market boom that increases wealth Draw either a new supply curve labeled SLF, or a new demand curve labeled DLF, Draw a point to show the new equilibrium real interest rate and the new equilibrium quantity of loanable funds the equilibrium real interest rate and A stock market boom OA raises, decreases saving and increases investme OB. raises; increases saving and decreases investment OC. raises; decreases investment and saving OD. lowers; increases saving and investment 0 10.0 90- 8.0 70 60 50- 40- 30- 2.0 104 Real interest rate (percent per year) 5.0 SLF 00- DLF G 10 10 12 14 16 10 Loanable funds (billions of 2012 dollars) >>> Draw only the objects specified in the question
What does this mean? "When drawn against the real interest rate, output supply increases if the labor supply is increasing in the interest rate."
The graph below represents the market for loanable funds for an economy. Use the graph to answer the following questions. real interest rate 6% 51000 Loanable fund $ Assume there currently is a surplus in the market for loanable funds. The current real interest rate is I Select) the equilibrium real interest rate. As the market moves to the equilibrium real interest rate we expect I Select ] Demand for loanable funds comes from the activities of ISelect) 13
Macmillan Learning U The graph depicts the market for loanable funds. Shift the appropriate curves to indicate what will happen to the market if there is an improvement in the technology firms use in production. As a result of this change, the real interest rate is now % Real interest rate 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 and the quantity of funds is $ billion. 0.5 Supply Demand 0.0 0 5 10 15 20 25 30 35 40 45 50 Loanable funds (in billions)
K Consider the graph to answer the following questions: a. The shift from S, to S₂ represents in the supply of loanable funds. b. With the shift in supply, the equilibrium quantity of loanable funds c. With the change in the equilibrium quantity of loanable funds, the quantity of saving and the quantity of investment ▼ A CI Real Interest Rate Market for Loanable Funds L₂ L1 Loanable Funds ($ per year) S₁ Q
The following graph shows the market for loanable funds in a closed economy. The upward-sloping orange line represents the supply of loanable funds, and the downward-sloping blue line represents the demand for loanable funds. Supply 5 Demand 1 100 200 300 400 500 600 LOANABLE FUNDS (Billions of dollars) is the source of the supply of loanable funds. As the interest rate falls, the quantity of loanable funds supplied Suppose the interest rate is 3.5%. Based on the previous graph, the quantity of loanable funds supplied is than the quantity of loans ▼ of loanable funds. This would encourage lenders to the interest rates they charge, thereby demanded, resulting in a the quantity of loanable funds supplied and the quantity of loanable funds demanded, moving the market toward 0% the equilibrium interest rate of INTEREST RATE (Percent)
Define Purchase of Investment.
Real interest rate (percent per year) 10 2 0 DLF 150 300 450 600 750 900 Loanable funds (billions of 2009 dollars) In the above figure, technological progress that increases the expected profit will shift the demand for loanable funds curve leftward. shift the demand for loanable funds curve rightward. have no effect on the demand for loanable funds curve. make the demand for loanable funds curve become horizontal.
(Figure: Market for Loanable Funds 2) Based on the graph, if business taxes increase, the demand for loanable funds curve will shift from to and the new equilibrium will be at point holding supply constant at So. So Real Interest Rates (%) Do; D₁; c Do; D₁; b D₁; Do; a a b Loanable Funds ($) d S₁ Do D₁
Consider the market for loanable fund. Suppose that government started to give tax incentives for investment (so the cost of investment fell.) Answer which curve (Demand or Supply) would shift to which direction (Left or Right), and answer how the equilibrium saving would change (Decrease or Increase)Curve: Direction: Saving:

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shift inwards AN shift outwards move-along upwards A rise in the interest rate would cause v move-along downwards n the Demand of Loanable Funds (Investment function).