The following graph shows the supply of and demand for capital in a market over the last year. You can see that the demand for capital has increased over the last year (the demand curve shifted to the right). Place the black X at the equilibrium interest rate and the quantity of capital INTEREST RATE, r (% Equilibrium D2 18 16 D1 14 12 10 8 S 2 0 2 4 6 8 10 12 14 16 18 20 CAPITAL (Billions of dollars) Clear All The market interest rate increased by 2.0%, and the amount of capital borrowed billion. Which of the following factors could be responsible for the change in demand shown in the graph? New technological advances opened up more production opportunities for businesses. Households began saving a greater percentage of their income. Expected inflation decreased. The Federal Reserve (the Fed) decided to relax its monetary policy and expanded the money supply. y 20 co

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter17: Capital And Time
Section: Chapter Questions
Problem 17.2P
icon
Related questions
Question
The following graph shows the supply of and demand for capital in a market over the last year. You can see that the
demand for capital has increased over the last year (the demand curve shifted to the right). Place the black X at the
equilibrium interest rate and the quantity of capital
INTEREST RATE, r (%
Equilibrium
D2
18
16
D1
14
12
10
8
S
2
0 2 4 6 8
10 12 14 16
18
20
CAPITAL (Billions of dollars)
Clear All
The market interest rate increased by 2.0%, and the amount of capital borrowed
billion.
Which of the following factors could be responsible for the change in demand shown in the graph?
New technological advances opened up more production opportunities for businesses.
Households began saving a greater percentage of their income.
Expected inflation decreased.
The Federal Reserve (the Fed) decided to relax its monetary policy and expanded the money supply.
y
20
co
Transcribed Image Text:The following graph shows the supply of and demand for capital in a market over the last year. You can see that the demand for capital has increased over the last year (the demand curve shifted to the right). Place the black X at the equilibrium interest rate and the quantity of capital INTEREST RATE, r (% Equilibrium D2 18 16 D1 14 12 10 8 S 2 0 2 4 6 8 10 12 14 16 18 20 CAPITAL (Billions of dollars) Clear All The market interest rate increased by 2.0%, and the amount of capital borrowed billion. Which of the following factors could be responsible for the change in demand shown in the graph? New technological advances opened up more production opportunities for businesses. Households began saving a greater percentage of their income. Expected inflation decreased. The Federal Reserve (the Fed) decided to relax its monetary policy and expanded the money supply. y 20 co
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Microeconomic Theory
Microeconomic Theory
Economics
ISBN:
9781337517942
Author:
NICHOLSON
Publisher:
Cengage
Principles of Economics 2e
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Economics:
Economics:
Economics
ISBN:
9781285859460
Author:
BOYES, William
Publisher:
Cengage Learning
Economics: Private and Public Choice (MindTap Cou…
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Microeconomics: Private and Public Choice (MindTa…
Microeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506893
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning