The following graph shows the supply of and demand for capital in a market over the last year. You can see that the demand for capital has increased over the last year (the demand curve shifted to the right). Place the black X at the equilibrium interest rate and the quantity of capital. INTEREST RATE, r (%) 20 18 16 14 12 ON 10 8 6 4 2 0 S D₁ 2 D₂ 4 6 8 10 12 14 16 18 20 CAPITAL (Billions of dollars) Equilibrium --X I Clear All The market interest rate increased by 2.0%, and the amount of capital borrowed by billion.
The following graph shows the supply of and demand for capital in a market over the last year. You can see that the demand for capital has increased over the last year (the demand curve shifted to the right). Place the black X at the equilibrium interest rate and the quantity of capital. INTEREST RATE, r (%) 20 18 16 14 12 ON 10 8 6 4 2 0 S D₁ 2 D₂ 4 6 8 10 12 14 16 18 20 CAPITAL (Billions of dollars) Equilibrium --X I Clear All The market interest rate increased by 2.0%, and the amount of capital borrowed by billion.
Chapter17: Capital And Time
Section: Chapter Questions
Problem 17.2P
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Question
![The following graph shows the supply of and demand for capital in a market over the last year. You can see that the
demand for capital has increased over the last year (the demand curve shifted to the right). Place the black X at the
equilibrium interest rate and the quantity of capital.
INTEREST RATE, r (%)
20
18
16
14
12
10
8
6
4
2
0
S
D₁
D₂
2 4
6
8 10 12 14 16 18 20
CAPITAL (Billions of dollars)
Equilibrium
I
Clear All
The market interest rate increased by 2.0%, and the amount of capital borrowed
by
Which of the following factors could be responsible for the change in demand shown in the graph?
The Federal Reserve (the Fed) decided to relax its monetary policy and expanded the money supply.
Expected inflation decreased.
New technological advances opened up more production opportunities for businesses.
Households began saving a greater percentage of their income.
billion.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1cc2b92d-88f7-4387-bcd8-a598c8da4a5a%2Fa20583be-6840-4654-a976-eae9c2bc4983%2F4r5sa5_processed.png&w=3840&q=75)
Transcribed Image Text:The following graph shows the supply of and demand for capital in a market over the last year. You can see that the
demand for capital has increased over the last year (the demand curve shifted to the right). Place the black X at the
equilibrium interest rate and the quantity of capital.
INTEREST RATE, r (%)
20
18
16
14
12
10
8
6
4
2
0
S
D₁
D₂
2 4
6
8 10 12 14 16 18 20
CAPITAL (Billions of dollars)
Equilibrium
I
Clear All
The market interest rate increased by 2.0%, and the amount of capital borrowed
by
Which of the following factors could be responsible for the change in demand shown in the graph?
The Federal Reserve (the Fed) decided to relax its monetary policy and expanded the money supply.
Expected inflation decreased.
New technological advances opened up more production opportunities for businesses.
Households began saving a greater percentage of their income.
billion.
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