For parts a)-d), evaluate the effect of each of the following events on the market for loanable funds. Explain the effects on savings, investment, and the (neutral) real interest rate. a) The government runs a government budget surplus instead of a deficit. b) The government decides to forgive some of the $66 billion in student loan debt. c) Chinese investors stop sending their funds to Australia, reducing net capital inflows. d) The nominal interest rate rises 1% in response to a 1% rise in the inflation rate.

For parts a)-d), evaluate the effect of each of the following events on the market for loanable funds. Explain the effects on savings, investment, and the (neutral) real interest rate. a) The government runs a government budget surplus instead of a deficit. b) The government decides to forgive some of the $66 billion in student loan debt. c) Chinese investors stop sending their funds to Australia, reducing net capital inflows. d) The nominal interest rate rises 1% in response to a 1% rise in the inflation rate.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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