Economics (Book Only)
12th Edition
ISBN: 9781285738321
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 30, Problem 3QP
(a)
To determine
Identify the changes in interest rate when the
(b)
To determine
Identify the changes in interest rate when the supply of loanable funds decreases.
(c)
To determine
Identify the changes in interest rate when the demand for investment loans rise.
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Qu Listen In which situation do you NOT contribute to the supply of loanable funds? a) You charge a vacation on a credit card. b) You pay off your mortgage. c) You open a new savings account. d) You make the final payment on your private student loan.
An increase in interest rate would lead to a _____ it's supply of loanable funds
a. No effect
b. None
c. Increase
d. Decrease
#### Correct answer //////
Explain answer correctly
Chapter 30 Solutions
Economics (Book Only)
Ch. 30.1 - Prob. 1STCh. 30.1 - Prob. 2STCh. 30.1 - Prob. 3STCh. 30.1 - Prob. 4STCh. 30.2 - Prob. 1STCh. 30.2 - Prob. 2STCh. 30.2 - Prob. 3STCh. 30.4 - Prob. 1STCh. 30.4 - Prob. 2STCh. 30.4 - Prob. 3ST
Ch. 30.4 - Prob. 4STCh. 30 - Prob. 1VQPCh. 30 - Prob. 2VQPCh. 30 - Prob. 3VQPCh. 30 - Prob. 4VQPCh. 30 - Prob. 5VQPCh. 30 - Prob. 1QPCh. 30 - Prob. 2QPCh. 30 - Prob. 3QPCh. 30 - Prob. 4QPCh. 30 - Prob. 5QPCh. 30 - Prob. 6QPCh. 30 - Prob. 7QPCh. 30 - Prob. 8QPCh. 30 - Prob. 9QPCh. 30 - Prob. 10QPCh. 30 - Prob. 11QPCh. 30 - Prob. 12QPCh. 30 - Prob. 13QPCh. 30 - Prob. 14QPCh. 30 - Prob. 15QPCh. 30 - Prob. 16QPCh. 30 - Prob. 17QPCh. 30 - Prob. 1WNGCh. 30 - Prob. 2WNGCh. 30 - Prob. 3WNG
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Similar questions
- In 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_forward12. Suppose the interest rate decreases. Other things constant, how will the loanable funds market be affected? a. The demand for loanable funds curve will shift to the right. b. The demand for loanable funds curve will shift to the left. c. The quantity of loanable funds demanded will increase. d. The quantity of loanable funds supplied will increase. 13. Suppose a research lab fired a chemist, and then an environmental protection group hired the chemist at the same salary. What would be the net effect of these events on aggregate demand? a. The aggregate demand would shift rightward. b. The aggregate demand would shift leftward. c. The aggregate demand would become steeper. d. The aggregate demand would remain the same.arrow_forwardIf and when the demand of loanable funds shifts to the left: Group of answer choices 1. This is good news for people who rely on the interest earnings from their savings but bad news for people who have outstanding home loans. 2. This is bad news for people who rely on the interest earnings from their savings but good news for people who have outstanding home loans. 3. This is good news both for people who rely on the interest earnings from their savings as well as those who have outstanding home loans. 4. This is bad news both for people who rely on the interest earnings from their savings as well as those who have outstanding home loans.arrow_forward
- 1. What happens to the quantity of loanable funds supplied when the interest rate rises? Explain why this change happensarrow_forward#18. What would happen in the market for loanable funds if the government were to increase the tax on interest income? a The supply of loanable funds would shift right. b The demand for loanable funds would shift right. c The supply of loanable funds would shift left. d The demand for loanable funds would shift left.arrow_forwardIf the interest rates increase this will _____ the quantity of loanable funds demanded, and if the interest rates decrease this will______it. Select one: a. increase; reduce b. increase; increase c. reduce; increase Od. reduce; reducearrow_forward
- Suppose government budget requires the government to sell $30 billion bonds to the public. A. Use supply-demand diagram to analyze the impact on interest rate and investment. Explain the effect in words. B. Answer (a) assuming that the supply of loanable funds in perfectly inelastic.arrow_forwardIn the era of Covid-19 pandemic, producers were pessimistic about the returns of capital and decide to reduce their investments, use a well-labelled diagram of loanable funds market to illustrate and explain the impacts on the equilibrium interest rate and quantity of loanable funds?arrow_forwardIf the zero lower bound binds on a loanable funds graphs, then there is excess A. saving B. bank capital C. inflation D. investmentarrow_forward
- 1. Using the market for loanable fund diagram, show graphically and explain how the interest rate and investment are affected in each of the following cases. (Draw a separate diagram for each.)i. Tax on interest income decreases.ii. Government is running a budget surplus.iii. Investment tax credit falls.arrow_forwardWhat is the difference between a loan and an investment? A. Investments are not made to sole proprietors. B. The investment is capped at a certain dollar amount, and a loan is not. C. Loans are only available to corporations and LLCs. D. Loans must be paid back, but investments do not.arrow_forwardAs the real interest rate falls: a) the supply of loanable funds increases. b) the quantity supplied of loanable funds decrease! c) more saving is supplied to the market. d) the supply of loanable funds decreases.arrow_forward
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