Figure 21-2 Apal Interest FME 0 000 4₁ Loanable funds (billions of dollars per year) Refer to Figure 21-2. Which of the following is consistent with the graph depicted above? New government regulations decrease the profitability of new investment. Consumption taxes increase. The government runs a budget surplus. An expected expansion increases the profitability of new investment.
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- In the market for loanable funds, the equilibrium interest rate is 3% and the equilirbium quantity of loanable funds is $500 billion.What's the likely result if bamks offer loans for an interest rate of 5%? a) the quantity of loans supplied by banks will be greater than the quantity of loans demanded from potential investors b) the government will issue more bonds to make up for the decreased number of loans c) there'll be an increase in borrowing d) the quantity of loanable funds demanded will increaseThe Atlantic Investment Tax Credit is a 10% tax credit available to businesses that make specific investments in the Atlantic region and the Gaspe Peninsula. The graph shows the market for loanable funds. Show the impact of this tax credit by moving the proper curve appropriately in the graph. The new equilibrium interest rate is The quantity of loanable funds is $ ક billion Which statement accurately describes the impact of the Atlantic Investment Tax Credit? Interest rate (%) 10 9 8 7 6 5 st 3 2 1 0 0 5 10 15 20 25 30 35 Quantity of loanable funds (in billions) 40 Supply Demand 45 50Saving, Investment, and the Financial System - End of Interest rate Chapter Problems 24% 22 5. The government is running a budget balance of zero when it decides to increase education spending by $200 20 18 16 billion and finance the spending by selling bonds. The 14 accompanying diagram shows the market for loanable funds before the government sells the bonds. Assume that there are no capital inflows or outflows. As a result of the 12 10 8 6 increase in education spending, the equilibrium interest rate 2 D by $200 1,200 percentage points, and the 400 600 800 1,000 Quantity of loanable funds (billions of dollars) equilibrium quantity of loanable funds by billion dollars. This an example of crowding out.
- 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.1. Assume that the loanable funds market in country X is currently in equilibrim represented by thegraph of the loanable funds where interest rate is r1 and Quantity of loanable funds as Q1. Assume that, government of Country X, which had a balanced budged now increased their spendingwhile the taxes are constant.GDP = 1,000 million BDT G = 100 million BDT C = 850 million BDTX = 100 million BDT T = 50 million BDT M = 125 million BDTA) What is the level of investment spending and private savings? B) What are amounts of budget balance (deficit/surplus) and net capital inflow? [Hint: net capitalinflow equals the value of imports (M) minus the value of exports (X)] Assume that the government funds the increase in spending through increased borrowingC) What will be the impact of the policy action on the interest rate and quantity of loanable funds?Draw correctly labeled graph D) Given your answer, how will the private sector be affected? Is there any “crowding out”?Explain. (Take help of…Define the term Projected annual net savings?
- u.edu.tr/mod/quiz/attempt.php?attempt=3214468&cmid%3D203021 Refer to the information provided in Figure 23.3 below to answer the question(s) that follow. amadı inden 270 miş 200 işaretle 130 60 450 100 200 300 Aggregate income (Y) Figure 23.3 Refer to Figure 23.3. The equation for the aggregate saving is Lütfen birini secin. O A S= -130 +0,4Y O B. S= 140 +05Y OC S= -80 +0.4Y ODS= -60 +03Y CES 200 +06Y Aggregate consumption (C)If the business community becomes more optimisticabout the profitability of capital, the _________curve for loanable funds would shift, driving theequilibrium interest rate _________.a. supply; upb. supply; downc. demand; upd. demand; downWhat is national saving? What is privet saving ?what is public saving? How are these three variables related?
- a. Consider the Market for Loanable Funds in a closed economy. What would be the impacts of the following events on interest rates and investment. i. The government introduces a tax credit for savings accounts of up to $10,000 per year. ii. The government introduces a tax credit for savings accounts of up to $10,000 per year, and at the same time it repeals an investment tax exemption provision. iii. The government raises the tax rates. iv. The government issues bonds worth $10 billion. b. In a closed economy GDP = $1,400, private saving = $225, government budget deficit = $15, and government spending $25 (all numbers are in billions). Calculate national saving, taxes, and consumption. %3DUse the analysis for the market for loanable funds diagram to illustrate and explain how thefollowing government policy affect the economy’s saving and investment. Policy 1: Suppose thegovernment changes the tax code, allowing individuals to reduce their taxable income if they savemoney in registered retirement savings plans (RRSPs). Your response should answer the following questions:a. State and explain which loanable funds curve would this policy affect? b. Which way would the loanable funds curve shift? c. What would be the impact on interest rates? Draw the loanable funds diagram to illustrate your answers for a to c.Which of the following policy actions wouldunambiguously reduce the supply of loanable fundsand crowd out investment?a. an increase in taxes and a decrease ingovernment spendingb. a decrease in taxes together with an increase ingovernment spendingc. an increase in both taxes and governmentspendingd. a decrease in both taxes and government spending