Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 21, Problem 6P
To determine
To explain:
The changes in loanable funds supply or
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Students have asked these similar questions
list the factors that affect the demand side of the loanable funds market. which factors shift the curve?
What happens to the quantity of loanable funds supplied when the interest rate rises? Explain why this change happens?
What happens to the market for loanable funds when interest rates increase?
Planned investments increase.
Planned investments is not effected
There is a decrease in demand for loanable funds.
There is a decrease in quantity demanded for loanable funds.
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Similar questions
- What factors make up the total demand for loanable funds? The total supply of loanable funds. Please list and define each of these demand and supply factors in the Loanable Funds Theory of Interest.arrow_forwardWhat impact does the government have in the loanable funds market? Forces that change the demand for investment in turn impact the demand for loanable funds. These forces include the change of government policiesarrow_forwardThe table below shows Demand and Supply for loanable fund at given time. Real interest rate Quantity of loanable fund demanded (billion $) Quantity of loanable fund supplied (billion $) 0.01 1000 400 0.02 950 450 0.03 900 500 0.04 850 550 0.05 800 600 0.06 750 650 0.07 700 700 0.08 650 750 0.09 600 800 0.10 550 850 0.11 500 900 0.12 450 950 0.13 400 1000 0.14 350 1050 0.15 300 1100 Instructions: Using excel, find the equilibrium real interest rate and quantity of loanable fund. show the equilibrium on a graph. If this country experiences a recession business cycle phase that decreases the demand for loanable fund by $200 billion. Find the new equilibrium real interest rate and quantity of loanable fund. Show the shift on the graph. list Two factors that shift SLF rightward and two factors that shift DLF rightward What is the meaning of crowding out?…arrow_forward
- What must have happened in the loanable funds market to produce the 2020 level of interest rates what caused this change?arrow_forwardThe European Union sold 225 billion euros of green bonds as part of its pandemic recovery fund. How would this bond's issuance affect the equilibrium in the market for loanable funds?arrow_forwardExplain answer correctlyarrow_forward
- What is market for loanable funds? Use the analysis of market for loanable fund to analyse the impact of saving incentives and government budget (deficits) toward the interest rate and quantity of loanable funds! (Explain your answer by using graphical approach)arrow_forwardProvide two examples of changes in the market for loanable funds that can result in a change in the level of interest rates. Explain how and why the interest rate changes based on the loanable fund theory.arrow_forwardIn the loanable funds market, if firms become more optimistic about future profitability, then the a demand for loanable funds will increase, interest rates will increase, and private sector investment spending will increase. b demand for loanable funds will decrease, interest rates will decrease, and the equilibrium quantity of borrowing will decrease. c supply of loanable funds will increase, interest rates will decrease, and the equilibrium quantity of borrowing will increase. d supply of loanable funds will increase, interest rates will increase, and private sector investment spending will increase.arrow_forward
- Chairman Latrobe, the Supreme Leader of Rolling Rock decided to increase the personal tax rate to fund the defense force. 8) How may this affect the loanable funds market? Explain by describing the change in the demand for, or the supply of, loanable funds. 9) Because of the change decreed by President Thug and your answer to question 8, what is likely to happen to the interest rate and the quantity of funds in the loanable funds market? 10) How will each of these Rolling Rockers feel about President Thug’s decision? (A) Investor Confidence (B) The President of Rolling Rock National Bankarrow_forwardUse the following graph to show the effects on the Market for Loanable Funds of many people deciding to play the lottery rather than save money for retirement: Instructions: Drag the supply curve to illustrate the appropriate change in supply. Market for Loanable Funds Interest Rate 100 90 Supply (Savings) 80 70 60 50 Demand (Investment) 40 30 20 10 10 20 30 40 50 60 70 80 90 100 Dollar volume of Savings, Investmentarrow_forwardIf the demand for loans is held constant, what is the immediate effect of an increase in the supply of loanable funds? A)Equilibrium interest rates decrease B)The equilibrium quantity of loanable funds decreases C)Total investment decreasesarrow_forward
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