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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

ENGR.ECONOMIC ANALYSIS
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 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 0 0 50 155 50 25 30 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
Transcribed Image Text: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 0 0 50 155 50 25 30 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
Given the information in the preceding tables, use the blue points (circle symbol) to plot the demand for loanable funds. Next, use the orange points (square symbol) to plot the supply of loanable funds. Finally, use the black point (cross symbol) to indicate the equilibrium in this market. INTEREST RATE (Percent) 8 6 2 0 0 Market for Loanable Funds 25 50 100 125 150 175 200 225 QUANTITY OF LOANABLE FUNDS (Billions of dollars) 75 D A SA ++ Equilibrium If the interest rate is 3%, then the quantity of loanable funds supplied would be pressure on the equilibrium interest rate. ? greater less than the quantity demanded, putting
Transcribed Image Text:Given the information in the preceding tables, use the blue points (circle symbol) to plot the demand for loanable funds. Next, use the orange points (square symbol) to plot the supply of loanable funds. Finally, use the black point (cross symbol) to indicate the equilibrium in this market. INTEREST RATE (Percent) 8 6 2 0 0 Market for Loanable Funds 25 50 100 125 150 175 200 225 QUANTITY OF LOANABLE FUNDS (Billions of dollars) 75 D A SA ++ Equilibrium If the interest rate is 3%, then the quantity of loanable funds supplied would be pressure on the equilibrium interest rate. ? greater less than the quantity demanded, putting
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