Which graph shows the effect of a government budget deficit on the loanable funds market? о Roal Interest rate Supply Real Interest rate Increased demand Old demand Quantity of loanable funds Decreased supply Old supply

Which graph shows the effect of a government budget deficit on the loanable funds market? о Roal Interest rate Supply Real Interest rate Increased demand Old demand Quantity of loanable funds Decreased supply Old supply

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

О
Real
Interest
rate
Old
supply Increased
supply
Demand
Real
interest
rate
Quantity of
loanable funds
Supply
Old
demand
Decreased
demand

Which graph shows the effect of a government budget deficit on the loanable funds market?
Real
Interest
rate
Real
Interest
rate
Supply
Increased
demand
Old
demand
Quantity of
loanable funds
Decreased
supply
Old
supply
C
DELL
910

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5. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (Note: You will not be graded on any changes you make to the graph.) Customize and control Google Chrome Supply Demand Supply Demand LOANABLE FUNDS (Billions of dollars) Scenario 1: Individual Retirement Accounts (IRAS) allow people to shelter some of their income from taxation. Suppose the maximum annual contribution to such accounts is $5,000 per person. Now suppose there is an increase in the maximum contribution, from $5,000 to $8,000 per year. INTEREST RATE (Percent)
What happens if there is an increase in the budget deficit? O O Raise the real Interest rate and decline the quantity of loanable funds demanded for Investment Lower the real Interest rate and decrease the quantity of loanable funds demanded for Investment. Lower the real Interest rate and increase the quantity of loanable funds demanded for Investment. Raise the real Interest rate and increase the quantity of loanable funds demanded for Investment. Reset Answer
Draw the graph of the effect on the equilibrium in the loanable funds market when corporate taxes increase. Does the demand for loanable funds increase or decrease? Does the interest rate increase of decrease?
1) Using a graph representing the market for loanable funds, show and explain what happens to interest rates and investment if: a reduction in military spending moves the government’s budget from deficit into surplus. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
A rise in the federal funds rate a. raises the long-term real interest rate. b. does not change the long-term real interest rate. c. lowers the long-term real interest rate. d. may raise or lower the long-term real interest rate, depending on whether the demand for loanable funds curve has a negative or a positive slope.
8 Demand, Supply 7 10 4 REAL INTEREST RATE (Percent) 3 2 - 10 20 30 40 50 60 70 80 QUANTITY OF LOANABLE FUNDS (Billions of dollars) Refer to Figure 33-1. If the real interest rate is 3 percent, the quantity of loanable funds demanded is $50 billion, and the quantity supplied is $30 billion. $20 billion, and the quantity supplied is $60 billion. $50 billion, and the quantity supplied is $60 billion. $30 billion, and the quantity supplied is $50 billion.
17. What makes up the supply curve in the loanable funds market? Why does this curve have a positive relationship with the real interest rate?
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