The table below shows the amount of savings and borrowing in a market for loans to purchase homes, measured in millions of dollars, at various interest rates.InterestRate QuantitySupplied QuantityDemanded5%                       98                            2216%                      129                           1917%                      160                           1608%                      178                           1429%                      196                           12410%                    214                           106What is the equilibrium interest rate and quantity of loaned funds?r =  %Q = Suppose there is a decrease in demand of money, what will happen to interest rates and quantity?Increase in Interest Rates, Increase in Quantity?Increase in Interest Rates, Decrease in Quantity?Decrease in Interest Rates, Increase in Quantity?Decrease in Interest Rates, Decrease in Quantity?

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Asked Feb 9, 2020
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The table below shows the amount of savings and borrowing in a market for loans to purchase homes, measured in millions of dollars, at various interest rates.

InterestRate QuantitySupplied QuantityDemanded
5%                       98                            221
6%                      129                           191
7%                      160                           160
8%                      178                           142
9%                      196                           124
10%                    214                           106

What is the equilibrium interest rate and quantity of loaned funds?

r =  %

Q =

Suppose there is a decrease in demand of money, what will happen to interest rates and quantity?


Increase in Interest Rates, Increase in Quantity?
Increase in Interest Rates, Decrease in Quantity?
Decrease in Interest Rates, Increase in Quantity?
Decrease in Interest Rates, Decrease in Quantity?

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Expert Answer

Step 1

At the equilibrium interest rate quantity demanded is equal to quantity supplied.

It is clear from the given table that the Quantity demanded is equal to Quantity Supplied at an interest rate of 7%. 

At i...

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