In the market for loanable funds, which of the following would increase both equilibrium interest rates and quantity of loanable funds? Businesses forecast an economic recession, leading them to abandon plans to expand. A popular podcast encourages Americans to save for retirement. The government implements an investment tax credit for companies that build new factories. O All of the above are correct.

In the market for loanable funds, which of the following would increase both equilibrium interest rates and quantity of loanable funds? Businesses forecast an economic recession, leading them to abandon plans to expand. A popular podcast encourages Americans to save for retirement. The government implements an investment tax credit for companies that build new factories. O All of the above are correct.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter21: Financial Markets, Saving, And Investment

Section: Chapter Questions

Problem 6P

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In an unhindered free market, the supply and demand for loanable funds and, hence, the going rate of interest are driven by: The amount of money printed by the U.S. Treasury Time preferences of market participants Animal spirits The amount of deposits in the Federal Reserve
If the demand for loans is held constant, what is the immediate effect of an increase in the supply of loanable funds? A)Equilibrium interest rates decrease B)The equilibrium quantity of loanable funds decreases C)Total investment decreases
Economists who forecast a future of secular stagnation believe that the ▼ demand supply for loanable funds may be low in coming years because A. the price of capital, particularly information technology goods such as computers, has been falling relative to the prices of other goods. B. rising population growth in the United States will increase the demand for housing. C. modern information technology firms require much more capital than older industrial firms. D. firms must meet their needs for capital with higher levels of expenditure.
Using a supply and demand diagram, explain the following scenario impacts the market for loanable funds. Show your work, and be specific about what happens to the equilibrium. (a) The government increases its debt, thus crowding out the loanable funds market.
If the following policies were implemented, how would it affect the market for loanablefunds, interest rates, investment and economic growth. Explain by using diagrams. a) A change in tax code that might increase private saving. b) Increase in government spending and also budget deficits.
Expecting an improving economy will generally cause an increase in investment that shifts the _____ curve for loanable funds to the _____. a. supply; left b. supply; right c. demand; left d. demand; right
Using a supply and demand diagram, explain the following scenario impacts the market for loanable funds. Show your work, and be specific about what happens to the equilibrium. (d) People’s values change, and they start to save more of their income.
Using a supply and demand diagram, explain the following scenario impacts the market for loanable funds. Show your work, and be specific about what happens to the equilibrium. (b) The government starts a program that makes it easier for new homeowners to takeout a mortgage.
A decrease in the level of business opportunity will generally _____ the loanable funds demand curve. A. not change B. right-shift C. cause a movement along D. left-shift
Suppose 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.
Consider the market for loanable funds.if expectations about South Africa's future economic performance are negative such that firms cancel plans to build new equipment and factories then in the short run we would expect i. Demand for loanable funds to increase ii. Supply of loanable funds to decrease iii.supply wi increase and demand for loanable funds to decrease iv. Interest rate to decrease
Investment — End of Chapter Problem Move the appropriate curve or curves in each graph to illustrate the effect of each of the four events on the market for loanable funds. If the event should not impact the market for loanable funds, then leave the graph unchanged.