The sudden outbreak of the pandemic has negatively affected consumer confidence and caused uncertainty regarding future income, and in particular the risk of future unemployment. The propensity of households to save has reached unprecedented levels in response to COVID-19. Investor confidence has dropped as well. Indicate how supply and demand for loanable funds can be affected. Use the diagram of the market of loanable funds to show the respective shifts of the curves and explain what possibly happens to the interest rate and investment in response to the changes.

The sudden outbreak of the pandemic has negatively affected consumer confidence and caused uncertainty regarding future income, and in particular the risk of future unemployment. The propensity of households to save has reached unprecedented levels in response to COVID-19. Investor confidence has dropped as well. Indicate how supply and demand for loanable funds can be affected. Use the diagram of the market of loanable funds to show the respective shifts of the curves and explain what possibly happens to the interest rate and investment in response to the changes.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter5: Business And Economic Forecasting

Section: Chapter Questions

Problem 2E

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