Draw a graph of the supply and demand of loanable funds. Then, show how the interest rate will be affected when the following scenarios occur: a. The government implements a program that reduces investment tax credits. b. The government budget deficit is reduced by 30%. (Hint: Does the government still need to borrow?) c. More foreigners are saving their money in U.S. banks.
Draw a graph of the supply and demand of loanable funds. Then, show how the interest rate will be affected when the following scenarios occur: a. The government implements a program that reduces investment tax credits. b. The government budget deficit is reduced by 30%. (Hint: Does the government still need to borrow?) c. More foreigners are saving their money in U.S. banks.
Chapter21: Financial Markets, Saving, And Investment
Section: Chapter Questions
Problem 9P
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Draw a graph of the supply and demand of loanable funds. Then, show how the interest rate will be
affected when the following scenarios occur:
a. The government implements a program that reduces investment tax credits.
b. The government budget deficit is reduced by 30%. (Hint: Does the government still need to borrow?)
c. More foreigners are saving their money in U.S. banks.
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