If foreign entities save more and governments decrease borrowing, we would correctly say that the new equilibrium quantity of loanable funds would be indeterminate, but the new equilibrium interest rate would be higher than the original. O based on this information and because both changes would affect the demand for loanable funds in the opposite way, we would be unable to say anything about the relationship of the new equilibrium interest rate and quantity to the original interest rate and quantity. O the new equilibrium quantity of loanable funds would be indeterminate, but the new equilibrium interest rate would be less than the original. O the new equilibrium quantity of loanable funds would decrease, but we would be unable to tell if the new equilibrium interest rate would be higher or lower than the original. O the new equilibrium quantity of loanable funds would increase, but we would be unable to tell if the new equilibrium interest rate would be higher or lower than the original.

If foreign entities save more and governments decrease borrowing, we would correctly say that the new equilibrium quantity of loanable funds would be indeterminate, but the new equilibrium interest rate would be higher than the original. O based on this information and because both changes would affect the demand for loanable funds in the opposite way, we would be unable to say anything about the relationship of the new equilibrium interest rate and quantity to the original interest rate and quantity. O the new equilibrium quantity of loanable funds would be indeterminate, but the new equilibrium interest rate would be less than the original. O the new equilibrium quantity of loanable funds would decrease, but we would be unable to tell if the new equilibrium interest rate would be higher or lower than the original. O the new equilibrium quantity of loanable funds would increase, but we would be unable to tell if the new equilibrium interest rate would be higher or lower than the original.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter19: The Macroeconomic Perspective

Section: Chapter Questions

Problem 29P: The prime interest rate is the rate that banks charge their best customers. Based on the nominal...

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