Show on the graph how each of the following events changes the equilibrium interest rate by shifting the relevant curve(s).a. The president signs a tax cut into law.b. An engineering advance induces many firms to upgradetheir computer systems.c. Congress repeals an investment tax credit anduses the revenue to reduce other taxes.d. A flu pandemic induces consumers to stay at home ratherthan go shopping.Interest rateInterest rateInterest rate10821110871110:211D 100 20010D 100 200300 400 500 600Lounable funds700SD800 900 1,000SD300 400 500 600 700 800 900 1,000Loanable fundsSDD 100 200 300 400 500 600 700 800 900 1,000Loanable fundsS

Market of Loanable funds:- The supply is the entire amount of loanable money available at a given…

Show on the graph how each of the following events changes the equilibrium interest rate by shifting the relevant curve(s). a. The president signs a tax cut into law. Interest rate 10 40 N 40 n + 2 1 D x 100 300 400 e 500 600 700 800 900 1,000 Loanable funds

Show on the graph how each of the following events changes the equilibrium interest rate by shifting the relevant curve(s). a. The president signs a tax cut into law. Interest rate 10 40 N 40 n + 2 1 D x 100 300 400 e 500 600 700 800 900 1,000 Loanable funds

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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
The current market rate of interest is 10 percent. At that rate of interest, businesses borrow $300 billion per year for investment and consumers borrow $50 billion per year to finance purchases. The government is currently borrowing $150 billion per year to cover its budget deficit. a. Derive the market demand for loanable funds, and show how investors and consumerswill be affected if the budget deficit increases to $250 billion per year. Draw a graphto show your conclusion. b. Assuming taxpayers do not anticipate an increase in the future market rate of interestdue to the increase in budget deficit, show the impact of the increase in the budget deficit on the market for loanable funds. c. How would your conclusion differ if taxpayers fully anticipate future tax increases to offset the increase in the budget deficit? d. Do you think the Ricardian Equivalence is realistic?
K Consider the graph to answer the following questions: a. The shift from S, to S₂ represents in the supply of loanable funds. b. With the shift in supply, the equilibrium quantity of loanable funds c. With the change in the equilibrium quantity of loanable funds, the quantity of saving and the quantity of investment ▼ A CI Real Interest Rate Market for Loanable Funds L₂ L1 Loanable Funds ($ per year) S₁ Q
Suppose the government ran a budget surplus in 2018 and a larger surplus in 2019. The loanable funds model would predict that, as a result of the increase in the surplus, A. both the government debt and interest rates increased between 2018 and 2019. B. the government debt decreased and interest rates increased between 2018 and 2019. both the government debt and interest rates decreased between 2018 and 2019. C. D. the government debt increased and interest rates decreased between 2018 and 2019.
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)
PLEASE ANSWER ALL QUESTIONS NOT JUST SOME PLEASE WRITE THE EXACT NUMBERS FOR THE GRAPH. PLEASE READ CAREFULLY, THIS MAY BE A SIMILAR QUESTION, BUT ALL QUESTIONS ARE DIFFERENT
A rise in the federal funds rate a. raises the long-term real interest rate. b. does not change the long-term real interest rate. c. lowers the long-term real interest rate. d. may raise or lower the long-term real interest rate, depending on whether the demand for loanable funds curve has a negative or a positive slope.
Hi I want to ask what will happen to the market of loanable funds and the natural level of output in long run when the government runs a budget surplus? what will the graph of the loanable funds market look like?