The following tables present a hypothetical economy's data on the relationship between various real interest rates and sector-specific supply and demand for loanable funds, where the currency is the U.S. dollar. Real Interest Rate (Percent) 7 6 5 4 3 2 Real Interest Rate (Percent) 7 6 5 4 3 2 Household Supply (Billions of dollars) 55 50 35 35 30 25 Household Demand (Billions of dollars) 15 25 35 50 60 70 Business Supply (Billions of dollars) 55 45 30 30 20 10 Business Demand (Billions of dollars) 10 20 30 40 45 55 Federal Government Supply (Billions of dollars) 5 5 5 5 5 5 Federal Government Demand (Billions of dollars) 5 5 5 5 5 5 Foreign Investor Supply (Billions of dollars) 60 50 25 30 15 5 Foreign Investor Demand (Billions of dollars) 5 20 25 35 50 55 Municipal Government Supply (Billions of dollars) 30 25 15 15 10 5 Municipal Government Demand (Billions of dollars) 5 10 15 20 25 30

The following tables present a hypothetical economy's data on the relationship between various real interest rates and sector-specific supply and demand for loanable funds, where the currency is the U.S. dollar. Real Interest Rate (Percent) 7 6 5 4 3 2 Real Interest Rate (Percent) 7 6 5 4 3 2 Household Supply (Billions of dollars) 55 50 35 35 30 25 Household Demand (Billions of dollars) 15 25 35 50 60 70 Business Supply (Billions of dollars) 55 45 30 30 20 10 Business Demand (Billions of dollars) 10 20 30 40 45 55 Federal Government Supply (Billions of dollars) 5 5 5 5 5 5 Federal Government Demand (Billions of dollars) 5 5 5 5 5 5 Foreign Investor Supply (Billions of dollars) 60 50 25 30 15 5 Foreign Investor Demand (Billions of dollars) 5 20 25 35 50 55 Municipal Government Supply (Billions of dollars) 30 25 15 15 10 5 Municipal Government Demand (Billions of dollars) 5 10 15 20 25 30

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter21: Financial Markets, Saving, And Investment

Section: Chapter Questions

Problem 9P

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] In the loanable funds market model, assuming everything else is constant, which curve (supply of funds or demand for funds) is affected if there is an increase in national saving? How will equilibrium real interest rate and equilibrium quantity of loans change?
ming - Google Chrome atic/nb/ui/evo/index.html?deploymentld=D56736719115714608139104112999&elSBN=9781337096607&id3D709153691&snapshotld=D1586258& Q Search this course CENGAGE MINDTAP Homework (Ch 13) es The following table contains data for a hypothetical closed economy that uses the dollar as its currency. A-Z Suppose GDP in this country is $1,330 million. Enter the amount for investment. Value National Income Account (Millions of dollars) Government Purchases (G) 350 Taxes minus Transfer Payments (T) 455 Tips 700 Consumption (C) Investment (I) 280 ips Fial of bonga ITED Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use data from the preceding table. National Saving (S) %3| million A+ 9:45 PM o search 4/3/202 hp f5 I f6 ins prt sc fg fg f12 II delete home end & 8. num backspace lock T. home %24
In each part that follows, use the economic data given to find national saving, private saving, public saving, and the national saving rate. a. Household saving = 200 Business saving = 400 Government purchases of goods and services = 120 Government transfers and interest payments = 100 Tax collections = 175 GDP = 2,300 Instructions: Enter your response for the national saving rate rounded to one decimal place. If you are entering any negative numbers, be sure to include a () In front of those numbers. National saving Private saving Public saving National saving rate GOO b. GDP = 6,050 Tax collections = 1,225 Government transfers and interest payments - 400 Consumption expenditures 4,500 Government budget surplus 100 Instructions: Enter your response for the national saving rate rounded to one decimal place, If you are entering any negative numbers, be sure to include a () in front of those numbers. National saving Private saving Public savingNational saving rate 100 c Consumption…
Suppose GDP in this country is $480 million. Enter the amount for investment. National Income Account Government Purchases (G) Taxes minus Transfer Payments (T) Consumption (C) Investment (I) Value (Millions of dollars) 150 180 225 Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use data from the preceding table. National Saving (S) Private Saving Public Saving Complete the following table by using national income accounting identities to calculate private and public saving. In your calculations, use data from the initial table. million 105 million million Based on your calculations, the government is running a budget
The table shows an economy's demand for loanable funds and supply of loanable funds schedules when the government's budget is balanced. The quantity of loanable funds demanded increases by $1.0 trillion at each real interest rate. The quantity of loanable funds supplied increases by $2.0 trillion at each real interest rate. After these changes, what is the real interest rate, the quantity of loanable funds, investment, and private saving? >>> Answer to 1 decimal place. The real interest rate is 5 percent a year. The quantity of loanable funds is $ trillion, investment is $ trillion, and saving is $s trillion. Real interest rate (percent per year) 45678 9 10 Loanable funds Loanable funds demanded supplied (trillions of 2012 dollars per year) 8.5 8.0 7.5 7.0 6.5 6.0 5.5 6.5 7.0 7.5 8.0 8.5 9.0 9.5
Use the analysis for the market for loanable funds diagrams to examine and explain both in words anddiagrammatically how the following government policy affect the economy’s saving and investment.Policy 1: Suppose the government passed a tax reform giving an investment tax credit to any firmbuilding a new factory or buying a new piece of equipment
This figure shows the loanable funds market for a closed economy. INTEREST RATE (Percent) 09 2 E с 50 100 150 LOANABLE FUNDS (Dollars) D₂ o Refer to Figure 26-4. Starting at point A, the enactment of an investment tax credit would likely cause the quantity of loanable funds traded to increase to $150 and the interest rate to rise to 6% (point C). decrease to $50 and the interest rate to fall to 2% (point B). decrease to $50 and the interest rate to rise to 6% (point E). increase to $150 and the interest rate to fall to 2% (point D).
Indicate the Quantity demanded and Quantity supplied of loanable funds if the Interest rates increases by 2% (from the equilibrium rate). would changed in interest rate cause a movement along the curve or shift? Interest rate 24% 22 20 ' 18 16 14 12 10 a 6 4 2 Y S ° $200 $400 600 D 800 1,000 1,200 Quantity of leanable funds (billions of dollars) Indicate the Quantity demanded and Quantity supplied of loanable funds if the Interest rates increases by 2% (from the equilibrium rate). would changed in interest rate cause a movement along the curve or shift?
The table shows the demand for loanable funds schedule and the supply of loanable funds schedule when the government budget is balanced. Loanable funds Loanable funds demanded Real interest rate (percent per year) supplied If the govemment budget surplus is $1.0 trillion, what are the real interest rate, the quantity of investment, and the quantity of private saving? (trillions of 2009 dotlars per year) 8.0 6.0 7.5 6.5 If the government budget surplus is $1.0 trillion, the real interest rate is percent a year. 7.0 7.0 6.5 75 If the government budget surplus is S1.0 trillion, the quantity of investment is S trillion, and the quantity of private saving is $ trillion. 6.0 8.0 5.5 8.5 10 5.0 9.0
Suppose GDP in this country is $1,540 million. Enter the amount for government purchases. National Income Account Value (Millions of dollars) Government Purchases (GG) Taxes minus Transfer Payments (TT) 455 Consumption (CC) 700 Investment (II) 490 Complete the following table by using national income accounting identities to calculate private and public saving. In your calculations, use data from the initial table. Private SavingPrivate Saving = = (t-g, y-t-i, c-t,y-c-t) = = million Public SavingPublic Saving = = (t-g, y-t-i, c-t, y-c-t) = = million Based on your calculations, the government is running a budget (surplus, deficit) .
Consider the following data (in billion $) for a country in a particular year: (assume this country has Zero Transfer Payment Personal consumption expenditure (C) 200 Exports (x) 10 Government Purchases of goods and services (G) 120 Imports (m) 15 Gross Domestic Product (Y) 1800 Taxes 20 g. Dose the government has deficit, balance or surplus budget? h. What is the amount of investment financed by national saving? i. What is the amount of investment financed by borrowing from rest of the world? J. What is the meaning of transfer payment