EBK EXPLORING MACROECONOMICS
7th Edition
ISBN: 9780100546400
Author: Sexton
Publisher: YUZU
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Question
Chapter 13, Problem 9P
To determine
(a)
To explain:
The effect on the loanable funds
To determine
(b)
To explain:
The effect on the loanable funds supply and demand curves if there is decrease in disposable income and new technologies are invented.
To determine
(c)
To explain:
The effect on the loanable funds supply and demand curves if there is increase in investment taxes and decrease in savings.
To determine
(d)
To explain:
The effect on the loanable funds supply and demand curves if costly business regulations are levied and there is increase in current earnings taxes.
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I recommend Mrs. Ibrahim's proposal to lower interest rates as the more effective approach for fostering economic growth in Sudan.
Sustainable Growth - Lowering interest rates encourages investment in productive capacity, which can lead to long-term economic growth rather than a temporary boost from cash transfers.
Job Creation - This approach can create more stable employment opportunities by promoting business expansion through lower borrowing costs.
Addressing Structural Issues - Lower interest rates can help address underlying structural issues in the economy, such as low production levels, by incentivizing businesses to invest in technology and infrastructure.
Inflation Control - While there is a risk of inflation if appropriately managed, focusing on productive investments can help mitigate this risk compared to the potential inflationary effects of direct cash transfers.
In conclusion, while both proposals have merit, Mrs. Ibrahim's approach of…
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