Anthony Annoreno:QuestionThe following are expected Short Term impacts coming from an increase in the totalSupply of Money injected by the Federal Reserve in the Market for Loanable Funds,EXCEPT:O Total Supply of Loanable Funds will IncreaseO Interest Rates will Decline.Inflation Rate will Decline (deflation)OMore Total Credit for Consumption and production will be available.

When the money supply increase, the loanable fund rate decrease. Thus, the inflation rate in the…

Answered: Anthony Annoreno: Question The…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter21: Financial Markets, Saving, And Investment

Section: Chapter Questions

Problem 9P

See similar textbooks

Similar questions

The economy of Dream Island, which is isolated from the rest of the world, has the supply of loanable funds schedule and the demand for loanable funds schedule shown in the table below. As it happens, all of the supplies of loanable funds are from households' savings and the entre demand for loanable funds is from firms' investment demand. Real interest rate (percent per year) Supply of loanable funds (2005 dollars) Demand for loanable funds (2005 dollars) 5 2,000 5,000 7 3,000 4,000 9 4,000 3,000 11 5,000 2,000 a) Draw the demand and supply curves.
true/false explain 4. When nominal interest rates are zero, the central bank can still lower them by printing money and purchasing bonds from banks. This increases the supply of loanable funds and stimulates lending.
Hide Assignment Information Instructions The table below is broken down by Month, Real Interest Rate (%), Loanable Funds (trillions of $), Exogenous Change, Equilibria (increases, decreases, or no change. Use the data table to determine the equilibrium real interest rate after certain factors change: Month Real Interest Rate (%) Loanable Funds (trillions of $) Exogenous Change Equilibria (increases, decreases, or no change) January 3% 3 no change no change April 3% 4 increased fund supply ? July 4% 2 decreased fund supply ? December 3% 3 increased fund demand ?
Consider a period in which stock prices are very high, such that investors begin to think that stocks are overvalued, and their valuations are very uncertain. If investors decide to move their money into much safer investments, would this affect general interest rate levels? In your answer, use the loanable fund's framework to explain how the supply of or demand for loanable funds would be affected by the investor actions and how this force would affect interest rates
Use the loanable fund's diagram to explain how you would expect an increase in inflationary expectations to affect: the supply and demand schedule The nominal rate of interest An increase desire to save for old age A reduction in taxes on income from saving
Let's say that due to political turmoil in the US and abroad, people all over the world start to lose confidence in American securities. Both Americans and foreigners prefer to do their financial investment elsewhere. As a result, we'd expect the supply of loanable funds to shift to the right and the real interest rate to fall the supply of loanable funds to shift to the left and the real interest rate to rise the supply of bonds to shift to the right and the real interest rate to fall the supply of bonds to shift to the left and the real interest rate to rise
b. Using the loanable funds theory, explain what will happen to the real equilibrium interest rate under the following scenarios: (In your discussion describe or show with a graph the change in the supply curve for loanable funds and the change in its intersection with the demand curve for loanable funds). (1) The U.S. Federal Reserve engages in an open market expansion policy to increase the money supply to speed up the economy. (2) The U.S. government has a larger demand for funds to fund a large deficit, so will be seeking to borrow loanable funds by issuing a large amount of new government bonds to sell to the public. (3) There is an expansion, and businesses are expanding and increasing their plans to take on new capital projects, increasing their demand for financing. (4) Wealth and liquidity rises in an economy, resulting in investors and savers more willing to invest/lend funds in an economy.
12. Which of the following is most likely to cause an increase in demand for loanable funds? (A) Banks fail across the nation, and are unable to return their depositors’ money. (B) The Financial Post releases a widely-read article, claiming that consumer and business confidence have declined. (C) The government provides a large tax credit for those who save money in banks. (D) The government reduces taxes on businesses, making investment more profitable.
What does the Fisher Effect tell us about the bond and loanable funds markets? I will rate accordingly. Typed answer please.
Suppose, the government of Australia incurs a budget deficit of $50 billion due to increased government spending in 2020 as result of Covid 19. Because of this, the government borrowing in 2021 increases by the same amount. a) Show this development using a graph representing the market for loanable funds for Australia[1]. Explain in writing the effect of this on interest rates.
Suppose the government of Australia incurs a budget deficit of $50 billion due to increased government spending in 2020 as result of Covid 19. Because of this, the government borrowing in 2021 increases by the same amount. a. Show this development using a graph representing the market for loanable funds for Australia. Explain in writing and using a graph the effect of this on interest rates. b. Compare the size of equilibrium changes in 1) investment, 2) public saving, 3) private saving and 4) national saving (public saving + private saving) with $50 billion increase in borrowing. Compare the changes (increase/decrease) in these variables indicating same, less or more than the $50 billion. c. Will the equilibrium quantity of national savings change by more or less than the initial change in public saving? Explain your answer (in 50 words…

Recommended textbooks for you

Exploring Economics

Economics

ISBN:

9781544336329

Author:

Robert L. Sexton

Publisher:

SAGE Publications, Inc

Brief Principles of Macroeconomics (MindTap Cours…

Economics

ISBN:

9781337091985

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Essentials of Economics (MindTap Course List)

Economics

ISBN:

9781337091992

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Exploring Economics

Economics

ISBN:

9781544336329

Author:

Robert L. Sexton

Publisher:

SAGE Publications, Inc

Brief Principles of Macroeconomics (MindTap Cours…

Economics

ISBN:

9781337091985

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Essentials of Economics (MindTap Course List)

Economics

ISBN:

9781337091992

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Survey Of Economics

Economics

ISBN:

9781337111522

Author:

Tucker, Irvin B.

Publisher:

Cengage,

Macroeconomics: Private and Public Choice (MindTa…

Economics

ISBN:

9781305506756

Author:

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:

Cengage Learning

Economics: Private and Public Choice (MindTap Cou…

Economics

ISBN:

9781305506725

Author:

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS