3. The money supply, the loanable funds market, and interest rates Changes in the money supply affect the interest rate through changes in the supply of loans, Real GDP, the price level, and the expected inflation rate. True or False: The expectations effect describes a change in the interest rate due to a change in the price level. True False The following graph shows the supply and demand curves in the market for loanable funds. Consider an increase in the price level. Adjust the following graph to show the effect of this increase in the price level. INTEREST RATE 4 24 2 QUANTITY OF LOANABLE FUNDS Which of the following refer to changes that affect both supply and demand in the loanable funds market? Check all that apply. The price-level effect The income effect The liquidity effect The expectations effect

Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter21: Financial Markets, Saving, And Investment
Section: Chapter Questions
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3. The money supply, the loanable funds market, and interest rates
Changes in the money supply affect the interest rate through changes in the supply of loans, Real
GDP, the price level, and the expected inflation rate.
True or False: The expectations effect describes a change in the interest rate due to a change in
the price level.
True
False
The following graph shows the supply and demand curves in the market for loanable funds.
Consider an increase in the price level.
Adjust the following graph to show the effect of this increase in the price level.
INTEREST RATE
$ 24 2
QUANTITY OF LOANABLE FUNDS
Which of the following refer to changes that affect both supply and demand in the loanable funds
market? Check all that apply.
The price-level effect
The income effect
The liquidity effect
The expectations effect
Transcribed Image Text:3. The money supply, the loanable funds market, and interest rates Changes in the money supply affect the interest rate through changes in the supply of loans, Real GDP, the price level, and the expected inflation rate. True or False: The expectations effect describes a change in the interest rate due to a change in the price level. True False The following graph shows the supply and demand curves in the market for loanable funds. Consider an increase in the price level. Adjust the following graph to show the effect of this increase in the price level. INTEREST RATE $ 24 2 QUANTITY OF LOANABLE FUNDS Which of the following refer to changes that affect both supply and demand in the loanable funds market? Check all that apply. The price-level effect The income effect The liquidity effect The expectations effect
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