Which of the following is one of the reasons that the demand curve for loanable funds is downward sloping? A lower real interest rate discourages domestic investors from purchasing foreign securities and encourages foreign investors to purchase domestic securities. OA higher real interest rate encourages people to save. OA lower real interest rate discourages people from saving. OA higher real interest rate makes borrowing more expensive. Which of the following is one of the reasons that the supply curve for loanable funds is upward sloping? OA higher real interest rate makes borrowing less expensive. OA lower interest rate makes borrowing less expensive. A lower real interest rate encourages domestic consumers to purchase foreign securities and discourages foreigners from purchasing domestic securities. A lower real interest rate makes saving less appealing.

Which of the following is one of the reasons that the demand curve for loanable funds is downward sloping? A lower real interest rate discourages domestic investors from purchasing foreign securities and encourages foreign investors to purchase domestic securities. OA higher real interest rate encourages people to save. OA lower real interest rate discourages people from saving. OA higher real interest rate makes borrowing more expensive. Which of the following is one of the reasons that the supply curve for loanable funds is upward sloping? OA higher real interest rate makes borrowing less expensive. OA lower interest rate makes borrowing less expensive. A lower real interest rate encourages domestic consumers to purchase foreign securities and discourages foreigners from purchasing domestic securities. A lower real interest rate makes saving less appealing.

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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During the financial crisis it was proposed that firms be provided with a tax credit for investment projects. Such a tax credit would shift: a. the demand for loanable funds left and shift the supply of dollars in the market for foreign-currency exchange right. b. both the demand for loanable funds and the supply of dollars in the market for foreign-currency exchange right. c. both the demand for loanable funds and the supply of dollars in the market for foreign-currency exchange left. d. the demand for loanable funds right and shift the supply of dollars in the market for foreign-currency exchange left.
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?
Table below shows total demand and supply of loanable funds (in RM billions) in an imaginary economy. Quantity demanded Interest rate of loanable funds Quantity supplied of loanable funds (percent) 85 4 72 80 6 73 75 8 75 70 10 77 65 12 79 60 14 81 A. Graph the market for loanable fund of this economy based on the data above and indicate the equilibrium quantity of loanable funds. B. Calculate the surplus or shortage at each level of interest rate. C. suppose the demand for loanable funds increases by RM 7 billion at each level of interest rate, indicate the effect of this changes on the equilibrium interest rate and quantity of loanable funds on your graph. |
Consider a loanable funds market of Pakistan. Suppose, if government want to implement the policy to provide incentives on savings by allowing people to shield their savings by opening Retirement Accounts with commercial banks. What is the effect of this policy on the market for loanable finds a. Interest rate will (Please write one word either increase or decrease in the blank). b. Quantity of loanable funds will (Please write one word either increase or decrease in the blank) Now assume, the parliament passed a tax reform aimed at making investment more attractive-for instance, by instituting an investment tax credit. An investment tax credit gives a tax advantage to any firm building a new factory or buying a new piece of equipment What is the effect of this policy on the market for loanable finds c. Interest rate will (Please write one word either increase or decrease in the blank). d. Quantity of loanable funds will (Please write one word either increase or decrease in the blank)
If foreign income and wealth decrease, this would most likely a. not affect the market for loanable funds. b. cause the supply of loanable funds to increase. c. cause the supply of loanable funds to decrease. d. cause the demand for loanable funds to increase in order for foreigners to maintain consumption. e. cause the demand for loanable funds to decrease.
Find a quote below and illustrate the effect of these phenomena on the world market for loanable funds. Make sure to explain the change of the equilibrium price and quantity of loanable funds. “Many Economists worry that the aging populations of industrial countries are going to start running down their savings just when the investment appetite of emerging economies, mostly in East Asia, is growing”.
If new technology makes existing capital obsolete and labour less productive, what are the effects in the loanable funds market according to some economists? Please choose all answers that apply. O A. A decrease in the real interest rate results. O B. The quantity supplied of loanable funds decreases. O c. Investment decreases. O D. An increase in the real interest rate results. OE. The demand for loanable funds increases.
Where does the demand for loanable funds come from in a closed economy? How does a government adopting a policy of taxing investment from the private sector impact the demand for loanable funds? What happens to the equilibrium interest rate following this policy? Illustrate using the supply and demand in the market for loanable funds.
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Question 23 Suppose the world consists of two countries, ABC and XYZ, only. The (autarky) equilibrium interest rate in ABC and XYZ are 15% and 12% respectively. The market for loanable funds can be described by the following equations: Country Demand for loanable funds Supply of loanable funds АВС DFABC = 300 – 7IABC SFB = 30 + 31ABC XYZ DFXYZ = 180 - 6ixyz SFc = 60 + 14ixYz Note: Interest rates are expressed in percentage points (i.e., if i = 5, then i = 5%). (inflows or When the international flows of capital are allowed, XYZ will experience net capital (enter a number here and keep your answer to the outflows) and the size of XYZ's trade balance is nearest integer) Next
4.4 and 4.5 please