he supply of loanable funds has a slope because the grea the quantity of loanable funds supplied. Onegative; lesser; greater Opositive; lesser, lesser Opositive; greater; gr positive: greater: lesser
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- Suppose the government runs fewer budget deficit and there is a decrease in the average household income. Then, O The new EQ quantity of loanable funds would be indeterminate, , but the new EQ interest rate would increase. O The new EQ quantity of loanable funds would decrease, but the new EQ interest rate would be indeterminate. O The new EQ quantity of loanable funds would be indeterminate, , but the new EQ interest rate would decrease. The new EQ quantity of loanable funds would be indeterminate, but the new EQ interest rate would increase. The new EQ quantity of loanable funds would increase, but the new EQ interest rate would be indeterminate.Interest Rate 0 Multiple Choice O O A O S₁ BC Quantity Refer to the diagram. Suppose that the demand for loanable funds is D₁ and the supply of loanable funds initially is S₁. If the supply of loanable funds increases to So, the equilibrium quantity of funds borrowed will increase from E to F. increase from A to B. increase from B to C. So decrease from G to F. Do D₁The loanable funds model suggests that increased government spending, financed by borrowing, will cause business nvestment to and household saving to Select one: O a increase, increase Ob increase; decrease Oc decrease, increase Od decrease; decrease
- Consider the market for loanable fund. Answer the question below. 2.a. The market equilibrium interest rate is 3%. But current interest rate is 4%. Then, is the supply of loanable fund larger, smaller or equal to the demand for loanable fund? 2.b. People’s preference for saving increased. Answer if the equilibrium interest rate and investment would increase, decrease, or would not change. Interest rate: Investment: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 $11 8 X 3400 2700 D 4500 Quantity of labor The economy is expected to boom, thereby increasing investment returns. O Larger investment projects with potentially higher returns get funded. Falling interest rates make it less expensive for firms to borrow. Rising interest rates make it more attractive for savers to save.A government budget deficit occurs, which The real interest rate O A. decreases the supply of loanable funds; falls O B. decreases the supply of loanable funds; rises C. decreases the demand for loanable funds; falls O D. increases the demand for loanable funds; rises
- Patrick wants to start his own dental practice, but his expenditures exceed his income. Which statement best describes Patrick? a. He is a saver who demands loanable finds from the financial system. b. He is a saver who supplies loariable funds to the financial system c. He is a borrower who demands loanable funds from the financial system. d. He is a borrower who supplies loanable funds to the financial systemWhat are the two components of the user cost of capital? Use an example capital good to explain.The following figure plots real interest rate against quantity of credit. Real interest rate (%) S, A B. S, D, D, Quantity of credit ($) Refer to the figure above. Assume that the loanable funds market initially is in equilibrium at point D. What has to be true for the new equilibrium to be at point A? O The inflation rate must increase. Companies' or individuals' savings must decrease. O Companies' or individuals' investments must decrease. O The demand of credit must not shift.
- Other things the same, people in the U.S. would want to save more if the real interest rate in the U.S. a. fell. The increased saving would increase the quantity of loanable funds demanded.b. fell. The increased saving would increase the quantity of loanable funds supplied.c. rose. The increased saving would increase the quantity of loanable funds demanded.d. rose. The increased saving would increase the quantity of loanable funds supplied.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 Interest rate will Quantity of loanable funds willSuppose the government borrows $20 million more next year than this year.a. Draw and fully label a diagram to illustrate the market for loanable fund to analyze this policy. b. Does the rate of interest rise or fall?
