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- If the interest rate in the loanable funds market is currently below the equilibrium level, then the quantity of funds demanded is ____ the quantity of funds supplied, and we can expect the interest rate to _______ over time. Group of answer choices less than : decrease greater than : decrease less than : increase greater than : increaseIf a popular TV show on personal finance convincesAmericans to save more for retirement, the_________ curve for loanable funds would shift,driving the equilibrium interest rate _________.a. supply; upb. supply; downc. demand; upd. demand; downSuppose that the government changes the tax code to allow additional amounts of money to be placed in 401(k) retirement accounts, increasing the extent to which people can delay their tax obligations. Show the effect by shifting the appropriate curve in the market for loanable funds.
- _______ raises the equilibrium real interest rate and decreases the equilibrium quantity of loanable funds. A. A decrease in default risk B. An increase in expected future income C. An increase in disposable income D. A decrease in wealthMost Australians are found to be frugal during the coronavirus pandemic and have started saving more. Explain how an increase in household saving affects the equilibrium interest rate and the equilibrium quantity of loanable funds.Suppose government provides tax rebate to small business on their business-related expenditure. Assuming no change in government budgetary position, this policy is likely to have a positive effect on household (or private) saving in the economy (Hint: think about the effect of this policy in Loanable Funds Market) Is this statement true, false or uncertain? Please provide your explaination.
- Consider the following figure which shows the loanable funds market (where SLF is the supply of loanable funds and DLF is the demand for loanable funds). If the real interest rate is 9 per cent, then a. there is a surplus in the loanable funds market b. there is a shortage in the loanable funds market. c. the demand for loanable funds curve will shift rightward. d. there will be a leftward shift in the demand for loanable funds curve.The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (graph in image) Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at banks. Initially, the interest income earned on bonds or deposits is taxed at a rate of 20%. Now suppose there is an increase in the tax rate on interest income, from 20% to 25%. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of interest income from saving causes the equilibrium interest rate in the market for loanable funds to (a. fall, b. rise) and the level of investment spending to (a. increase, b. decrease). Scenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases…At an interest rate of 6%, the equilibrium of supply and demand in loanable fund is 3 billion pounds. If the interest rate is 8% households and firms will want to borrow more or less than 3 billion?
- Which of the following shifts the demand for loanable funds curve to the right (increases demand for loanable funds) (CV) Which of the following shifts the demand for loanable funds curve to the right (increases demand for loanable funds) the real interest rate decreases the marginal product of capital decreases the marginal product of capital increases the real interest rate increasesConsider 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 (Please write one word either increase or decrease in the blank). Quantity of loanable funds will (Please write one word either increase or decrease in the blank) Now assume, the parliament passed a tax reform aimed at making investment more attractive—for instance, by instituting an investment tax credit. An investment tax credit gives a tax advantage to any firm building a new factory or buying a new piece of equipment What is the effect of this policy on the market for loanable finds Interest rate will (Please write one word either increase or decrease in the blank). Quantity of loanable funds will (Please write one word either increase or decrease in the blank)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 (Please write one word either increase or decrease in the blank). Quantity of loanable funds will (Please write one word either increase or decrease in the blank) Now assume, the parliament passed a tax reform aimed at making investment more attractive—for instance, by instituting an investment tax credit. An investment tax credit gives a tax advantage to any firm building a new factory or buying a new piece of equipment What is the effect of this policy on the market for loanable finds Interest rate will (Please write one word either increase or decrease in the blank). Quantity of loanable funds will 8(Please write one word either increase or decrease in the blank)