Which of the following could explain an increase in the equilibrium interest rate and a decrease in the equilibrium quantity of loanable funds? 1) The demand curve for loanable funds shifted right. • 2) The demand curve for loanable funds shifted left. 3) The supply curve of loanable funds shifted right. 4) The supply curve of loanable funds shifted left.

Which of the following could explain an increase in the equilibrium interest rate and a decrease in the equilibrium quantity of loanable funds? 1) The demand curve for loanable funds shifted right. • 2) The demand curve for loanable funds shifted left. 3) The supply curve of loanable funds shifted right. 4) The supply curve of loanable funds shifted left.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter16: Interest, Rent, And Profit

Section: Chapter Questions

Problem 3QP

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The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. B * C D F S₂ D₂ S₁ D₁ Refer to Figure 1. A shift of the supply curve from S 2 to S 1 is called O a. a decrease in the demand for loanable funds. O b. a decrease in the quantity of loanable funds demanded. O c. an increase in the supply for loanable funds. O d. an increase in the quantity of loanable funds supplied.
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8- Describe how the following statements affect either the supply or the demand for loanable funds. For each statement below, do the following: Explain whether the event affects either the demand or the supply of loanable funds. Describe how the statement will affect the equilibrium interest rate and quantity of loanable funds. Draw a graph to demonstrate each answer. Please remember to label each part of the graph. Indicate the change in the interest rate and the quantity of loanable funds on your graph. Analyze each event independently. (Hint: Review the slides and recordings of Lecture 4 for similar graphical analysis). Statements: a) "The national-level saving rate is important from a macroeconomic perspective, in the sense that higher savings tend to strengthen the economy over the long run." b) “Slow-trend growth is reducing the opportunities for profitable long-term investments. The recent downturn in business investment was less of a cyclical blip than a sign of things to…
Scenario 1: Individual Retirement Accounts (IRAs) allow workers to shelter a portion of their income from taxation. Suppose the maximum annual contribution to accounts of this type is $6,000 per person. Now suppose there is an increase in the maximum contribution, from $6,000 to $9,000 per year. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds tofall and the level of investment spending toincrease . Scenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases new capital within some relevant time period. Suppose the government implements a new investment tax credit. Shift the appropriate curve on the graph to reflect this change. The implementation of the new tax credit causes the interest rate tofall and the level of saving tofall . Scenario 3: Initially, the government's budget is balanced; then…
Table below shows total demand and supply of loanable funds (in RM billions) in an imaginary economy. Quantity demanded Interest rate of loanable funds Quantity supplied of loanable funds (percent) 85 4 72 80 6 73 75 8 75 70 10 77 65 12 79 60 14 81 A. Graph the market for loanable fund of this economy based on the data above and indicate the equilibrium quantity of loanable funds. B. Calculate the surplus or shortage at each level of interest rate. C. suppose the demand for loanable funds increases by RM 7 billion at each level of interest rate, indicate the effect of this changes on the equilibrium interest rate and quantity of loanable funds on your graph. |
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