The following figure shows credit demand and credit supply curves. Real interest rate (%) B Shifts to point D Remains at point C Shifts to point B Shifts to point A A D D₂ S₂ S₁ D₁ Quantity of credit ($) Refer to the figure above. Assume that the loanable funds market initially is in equilibrium at point C. How is the equilibrium likely going to change if college tuition becomes free for all students?
The following figure shows credit demand and credit supply curves. Real interest rate (%) B Shifts to point D Remains at point C Shifts to point B Shifts to point A A D D₂ S₂ S₁ D₁ Quantity of credit ($) Refer to the figure above. Assume that the loanable funds market initially is in equilibrium at point C. How is the equilibrium likely going to change if college tuition becomes free for all students?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:The following figure shows credit demand and credit supply curves.
Real interest
rate (%)
B
Shifts to point D
Remains at point C
Shifts to point B
Shifts to point A
A
D
C
D₂
S₂
S₁
D₁
Quantity of
credit ($)
Refer to the figure above. Assume that the loanable funds market initially is in equilibrium at point C.
How is the equilibrium likely going to change if college tuition becomes free for all students?
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