Supply and demand for loanable funds The following graph shows the market for loanable funds in a closed economy. The upward-sloping orange line represents the supply of loanable funds, and the downward-sloping blue line represents the demand for loanable funds. _____(saving/investment) is the source of the supply of loanable funds. As the interest rate falls, the quantity of loanable funds supplied ______(decrease/increase). Suppose the interest rate is 2.5%. Based on the previous graph, the quantity of loanable funds supplied is ______(greater/less) than the quantity of loans demanded, resulting in a ______(surplus/shortage) of loanable funds. This would encourage lenders to ______(raise/lower) the interest rates they charge, thereby ______(increasing/decreasing) the quantity of loanable funds supplied and _______(increasing/decreasing) the quantity of loanable funds demanded, moving the market toward the equilibrium interest rate of ________%(how many percent). Note:- Everything written in bold handwriting is the option for the question. So please give all the correct answers to this problem. Also, the graph (in the image) is for help and tells how many percent for the last answer.
Supply and demand for loanable funds The following graph shows the market for loanable funds in a closed economy. The upward-sloping orange line represents the supply of loanable funds, and the downward-sloping blue line represents the demand for loanable funds. _____(saving/investment) is the source of the supply of loanable funds. As the interest rate falls, the quantity of loanable funds supplied ______(decrease/increase). Suppose the interest rate is 2.5%. Based on the previous graph, the quantity of loanable funds supplied is ______(greater/less) than the quantity of loans demanded, resulting in a ______(surplus/shortage) of loanable funds. This would encourage lenders to ______(raise/lower) the interest rates they charge, thereby ______(increasing/decreasing) the quantity of loanable funds supplied and _______(increasing/decreasing) the quantity of loanable funds demanded, moving the market toward the equilibrium interest rate of ________%(how many percent). Note:- Everything written in bold handwriting is the option for the question. So please give all the correct answers to this problem. Also, the graph (in the image) is for help and tells how many percent for the last answer.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
4. Supply and demand for loanable funds
The following graph shows the market for loanable funds in a closed economy. The upward-sloping orange line represents the supply of loanable funds, and the downward-sloping blue line represents the demand for loanable funds.
_____(saving/investment) is the source of the supply of loanable funds. As the interest rate falls, the quantity of loanable funds supplied ______(decrease/increase).
Suppose the interest rate is 2.5%. Based on the previous graph, the quantity of loanable funds supplied is ______(greater/less) than the quantity of loans demanded, resulting in a ______(surplus/shortage) of loanable funds. This would encourage lenders to ______(raise/lower) the interest rates they charge, thereby ______(increasing/decreasing) the quantity of loanable funds supplied and _______(increasing/decreasing) the quantity of loanable funds demanded, moving the market toward the equilibrium interest rate of ________%(how many percent).
Note:- Everything written in bold handwriting is the option for the question. So please give all the correct answers to this problem. Also, the graph (in the image) is for help and tells how many percent for the last answer.
Transcribed Image Text:6
Supply
Demand
1
100
200
300
400
500
600
LOANABLE FUNDS (Billions of dollars)
INT EREST RATE (Percent)
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