Question
Asked Oct 2, 2019
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After reading the given descriptions, please place the correct label by the quadrant on the graph that best describes each person's position in the market for loanable funds.

  • Jolien decides not to take out a loan to fund expanding her grocery store because she projects it will only earn a return of 4%4%.
  • Osi closely follows the market for United States Treasury Bonds. He is willing to invest in them anytime the rate of return is 5%5% or higher, and sees that this is the case.
  • In order to open a new car wash facility expected to return 13%13%, Julius secures a loan.
  • John will shift his stock investments to corporate bonds when they return at least 10%10%. They do not, so he stays with stocks
S
8.0-
Quantity of loanable funds (billions of dollars)
Answer Bank
Osi
Julius
John
Jolien
Interest rate (%)
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S 8.0- Quantity of loanable funds (billions of dollars) Answer Bank Osi Julius John Jolien Interest rate (%)

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Expert Answer

Step 1

Person Jol demands loan in this case. The amount of loan demanded by her lies on the lower portion of the demand curve.

Person O is the supplier of loanable funds in this case because she wants to invest, and she will supply the loan at an interest rate of 5% or higher which lies in the lower portion of the supply curve.

Person Ju demands loan a...

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