The table sets out the data for an economy when the government's budget is balanced. Real interest rate Loanable funds demanded Loanable funds supplied (billions of 2012 dollars) (percent per year) 4 5 6 7 8 9 10 6.5 6.0 5.5 5.0 4.5 4.0 3.5 4.5 5.0 5.5 6.0 6.5 7.0 7.5

The table sets out the data for an economy when the government's budget is balanced. Real interest rate Loanable funds demanded Loanable funds supplied (billions of 2012 dollars) (percent per year) 4 5 6 7 8 9 10 6.5 6.0 5.5 5.0 4.5 4.0 3.5 4.5 5.0 5.5 6.0 6.5 7.0 7.5

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

See similar textbooks

Related questions

Q: The following cash flows result from a potential construction project for your company: Receipts of…

A: The given data is as follows: Receipts: At the start of contract=$545,000 At the end of…

Q: Consider an economy that is initially in long-run equilibrium. Assume that the long- run aggregate…

A: Over the long run, Economy is at full employment condition. The change in the demand or supply might…

Q: Make 1 demand graph and 1 supply graph to plot the data in the table Suppose that the aggregate…

A: A macroeconomic model is the AD-AS, or aggregate demand-aggregate supply model. The aggregate…

Q: Peanut butter and jam can be either substitutes or it can be compliments. Caitlin likes peanut…

A: The relationship between these items is identified using the cross elasticity of demand. When two…

Q: Suppose the demand for L.L. Bean coats is illustrated in the figure to the right. Suppose the price…

A: Revenue refers to the total amount of income that is generated from selling goods and services ,…

Q: What is the present value of $100 paid two years from now when the interest rate is 10 percent?

A: Given value of $100 paid 2 years from now Interest rate = 10 % Time = 2 years

Q: In five years, you want to be able to buy a new car for $30,000. If the interest rate is 3 percent a…

A: Prevent value refers to the sum of money that needs to be invested to reach a particular sum in the…

Q: What new opportunities are available in the goods markets and the financial markets in an open…

A: An open market refers to an economic system that does not impose high barriers to free-market…

Q: Price Level P1 The Keynesian AS curve Yo AS Yf Up to real output level yf increases in AD have no…

A: Inter an economy, aggregate demand refers to the total amount bof domestic output demanded by…

Q: 48. Shifts of supply and demand Answer the indicated question(s) by selecting the letter of the…

A: At Equilibrium Price, quantity demanded is equal to quantity supplied. Change in demand and supply…

Q: 5 4 3 2 0 12 24 36 48 60 72 84 96 108 120 Quantity (kilos) per day If the government were to give…

A: If the government gives subsidies to avocado farmers (the producer), the supply curve will shift to…

Q: Economists in Funlandia, a closed economy, have collected the following information about the…

A: Private savings are the total of household and business savings.

Q: Assume an aggregate production function where Y=(L^0.6)*(K^0.4). Then it must be true that. O a. the…

A: Y = L0.6 K0.4 Differentiate Y w.r.t L to get MPL => MPL = dY / dL => MPL = 0.6 (K/L)0.4 If we…

Q: Mr Sam had invested dollar 1,000 now and it answer 6% interest rate how much it would be worth after…

A: Introduction: It is given that Sam invested the amount of 1000 that earns a 6% interest rate and we…

Q: The figure to the right shows the initial distribution of the population aged 15 and older into…

A: Given information: Employed = 18.84 million Unemployed = 1.17 million Not in the labor force = 10.99…

Q: Following the Keynesian cross, if there is a sudden tidal wave of investment, then it must be true…

A: as we know that AD=C+I in two sector closed model. where I stand for investment and is positively…

Q: In the classical supply curve case, monetary expansion will Multiple Choice O increase P. lower i,…

A: In the classical theory economists main focus is on a sole factor - interest rates. The interest…

Q: in economics, what are the following ⦁ the aggregate supply (AS) curve in the immediate short run.…

A: Aggregate supply curve is the total product produced in the economy in terms of monetary value. AS…

Q: Question 16 Use the table to answer the question. Price Quantity Demanded $25 $30 $35 $40 $45 $50…

A: Shortage is when demand is greater than supply. This means Shortage = Quantity demanded - quantity…

Q: The market equilibrium is represented by the equation 3p +7X-23 where p unit price $/unit and X…

A: Answer to the question is as follows:

Q: Lui's utility function is U(x,y) = x9 y. Find the value at the bundle (x,y) =(4,2) of the derivative…

A: Given Lui's utility function: U(x,y)=x9y ......(1) The marginal rate of substitution of good…

Q: Consider the following utility functions. G(x,y) = x² + 3y² H(x,y) = (x+1)¹/2 + y + 1 L(x,y) = x ey…

A: The function for which the MRS decreases as good x increases, have strictly convex preference.

Q: Suppose the production function of a country is Y = (K^0.5)*(L^0.5). The economy begins with 64…

A: The real wage is equal to the marginal product of labour this can be proved by :- Profit = P x Y -…

Q: Jerry's utility function is U(x,y) = (5x + y )18. Find Jerry's MRS (for good X in terms of good Y)…

A: The quantity of a good that a consumer is prepared to consume in comparison to another good,…

Q: Why are you unable to draw an indifference curve for lexicographic preferences, describe with a…

Q: The expression for Hui's MRS (= Ux/Uy) is given by MRS = 4.5y/(x+1). What is the value of the…

A: Given information: MRS = 4.5y / (x+1) We need to find the value of dMRS / dx at the point where x=2…

Q: 3. Suppose that at present total currency in the Philippine economy is presently PHP5.5 trillion,…

A: The total amount of money that is either held by the general public as legal tender or that is held…

Q: Explain the two approaches that can be used to compute GDP. Why do these two approaches lead to the…

A: Introduction Gross Domestic Product or GDP is referred to as the total monetary value of all the…

Q: Two Cournot competitors face inverse demand p = 50 - Q, where Q = 9₁ +92 is the total output of…

A: Inverse face demand: p = 50 - Q Q = q1 + q2 Now, p = 50 - ( q1 + q2) = 50 - q1 - q2 p = 50 - q1 - q2…

Q: 4. Apply the classical theory. Consider a hypothetical economy described below: Y=C+I+G C = 50+ c(Y…

A: Given information C=50+c(Y-T) I=300-20r Y=2000 T=900 G=1500 C=0.6

Q: Saving equals Group of answer choices Y - C. Y - I. Inventory changes. Y - G

A: The fraction of money left over after paying for current expenses is what is saved. In other words,…

Q: question 1: In Figure 1 , how does the AD-AS model reflect the idea that governments cannot…

A: A macroeconomic model is the AD-AS, or aggregate demand-aggregate supply model. The aggregate…

Q: Billy B. decided four years ago to add high bush blueberries to his commercial vegetable farm near…

A: At breakeven, the economic profit is zero The formula of breakeven quantity: QBE=FCP-VC Given The…

Q: Congress’s passage of new laws significantly relaxing the regulation of business would tend to…

A: The aggregate supply is the entire amount of output that enterprises will generate and sell. The AS…

Q: How does the microcredit approach (or Bangladesh consensus) differ from the poverty capital approach…

A: The microcredit approach acts as a development tool that holds the strong potential to empower…

Q: Suppose the consumption function is given by C=1000+ 0.55(YT), exogenous investment by I = 660,…

A: Consumption is function which shows the relationship between disposable income and consumption. and…

Q: Tom's net investment was $15,000, so at the end of 2020, Tom's had capital valued at $45,000 On…

A: Gross investment refers to the total investment done during the year including the value of…

Q: Hi! Can I please get help with deriving this CES demand function to get the Marshallian demand…

A: Here we are given the utility function and considering the budget of the consumer we will construct…

Q: 3. Relationship between tax revenues, deadweight loss, and demandelasticity The government is…

A: Here we are given 2 markets a)market for jackets b) market for smartphone. In both the markets the…

Q: In order to save for your retirement, you want to save $2,000 every year for 15 years, starting one…

A: Given constant deposit at the end of each year = 2000 $ Time = 15 years Interest rate = 8 %

Q: Complete the following table with the tax revenue collected and deadweight loss caused by each of…

A: The values of deadweight loss and tax revenue are already calculated in the answer and explained how…

Q: A company intended to sell a high end refrigerator which included French doors, external water and…

A: Business liability insurance insures companies against losses they incur as part of their business…

Q: The Keynesian Model of the macroeconomy argues that prices are sticky due to labor contracts and…

A: Keynesian model of AD and AS curve help to determine the price and output level. As per Keynes the…

Q: You buy a bond that has an annual interest rate of 2 percent and a coupon of $4. What is the price…

A: Given information: The annual interest rate is 2 percent The coupon on the bond is $4 There is an…

Q: Only one of the options is correct, not three

A: Nominal GDP is the value of all final goods and services produced in any economy during a given…

Q: The economy experiences a decrease in the price level and an increase in real domestic output. Which…

A: The total quantity of demand for all finished goods and services produced in a given economy is…

Q: Suppose GDP is $8 trillion, taxes are $1.5 trillion, private saving is $0.5 trillion, and public…

A: Introduction: In the question, it is given that the gross domestic product is $8 trillion, taxes are…

Q: An insured's $3,000 outboard motorboat is struck by lightning. Under the insured's homeowner policy…

A: Given that:- The sum insured for motorboat = $3000 when the insurance is taken then the insurance…

Q: What happen to the economy of the Philippines when Filipino people mostly unemployed

A: A person is said to be unemployed when he or she is actively looking for job at prevailing market…

Q: heighborhood lawns for extra money. Suppose that he would be willing to mow one lawn for $13, a…

A: A consumer surplus happens when the price consumers pay for an item or service is not exactly the…

Question

What is the equilibrium real interest rate?

The real interest rate is ____ percent a year.

Screenshot attached thanks

Question 5
The table sets out the data for an economy when the government's budget is
balanced.
Real
interest rate Loanable funds demanded Loanable funds supplied
(billions of 2012 dollars)
(percent
per year)
st
10 10
5
8
9
10
6.5
6.0
5.5
5.0
4.5
4.0
3.5
4.5
5.0
5.5
6.0
6.5
7.0
7.5

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

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.
When does the supply of loanable funds increase? The supply of loanable funds increases when disposable income _______ or wealth _______. A. decreases; increases B. decreases; decreases C. increases; increases D. increases; decreases Thanks!
In the standard loanable funds market graph, … …an increase in the supply of loanable funds (rightward shift)... Group of answer choices A) none of the other options. B) could be caused by a tax increase for individuals on interest earned from savings accounts. C) would cause an increase in the real interest rate. D) could be caused by a tax break for businesses on investment spending. E) would cause a decrease in the real interest rate.
Loanable fund graph- show the result of a fiscal, crowding out and the effect on the supply of loanable funds
Usually, when the supply of loanable funds increases, then interest rates Select one: a. Might increase or decrease. b. Increase. c. Remain unchanged. d. Decrease.
Suppose government budget requires the government to sell $30 billion bonds to the public. A. Use supply-demand diagram to analyze the impact on interest rate and investment. Explain the effect in words. B. Answer (a) assuming that the supply of loanable funds in perfectly inelastic.
If the business community becomes more optimisticabout the profitability of capital, the _________curve for loanable funds would shift, driving theequilibrium interest rate _________.a. supply; upb. supply; downc. demand; upd. demand; down
Suppose there are two types of investment in the economy: business fixed investment and residential investment. Suppose that loanable fund market is in equilibrium and the government grants an investment tax credit only for business investment. How does this policy affect the supply and demand for loanable funds, the equilibrium interest rate and equilibrium quantity of loanable funds? Use graph to explain your answer.
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
Using the market for loanable fund diagram, show graphically how it affects interest rate and investment in each of the following cases. a) G > T. b) A book titled ‘Live for Tomorrow’ convinces people to spend less. c) Tax on interest income rises. please answer step by step.Answer must be correct.Show all calculation. please Don,t copy from anywhere.
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.
Patrick wants to start his own dental practice, but his expenditures exceed his income. Which statement best describes Patrick? a. He is a saver who demands loanable finds from the financial system. b. He is a saver who supplies loariable funds to the financial system c. He is a borrower who demands loanable funds from the financial system. d. He is a borrower who supplies loanable funds to the financial system