Principles of Economics, 7th Edition (MindTap Course List)
Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 26, Problem 5QCMC
To determine

The effect of optimistic future expectations on the loanable fund market.

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Which of the following reasons could cause the demand curve for loanable funds to shift to the right from DLF to D¹LF in the figure? Wage $11 8 X 3400 2700 D 4500 Quantity of labor The economy is expected to boom, thereby increasing investment returns. O Larger investment projects with potentially higher returns get funded. Falling interest rates make it less expensive for firms to borrow. Rising interest rates make it more attractive for savers to save.
What is the effect of a fall in the real interest rate on the demand for loanable funds? A fall in the real interest rate _______.     A. decreases the demand for loanable funds and shifts the demand curve leftward   B. decreases the quantity of loanable funds demanded up along the demand curve   C. increases the demand for loanable funds and shifts the demand curve rightward   D. increases the quantity of loanable funds demanded down along the demand curve Thanks!
What is the effect of a fall in the real interest rate on the demand for loanable funds? A fall in the real interest rate _______.     A. increases the quantity of loanable funds demanded down along the demand curve   B. decreases the quantity of loanable funds demanded up along the demand curve   C. decreases the demand for loanable funds and shifts the demand curve leftward   D. increases the demand for loanable funds and shifts the demand curve rightward
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