Subject:economics We have the following data on the loanable funds market in Country B:Real Interest Rate Loanable Funds Demanded (million Loanable Funds Supplied (million(%)12AWN34567O a. 5 million TLO b. 2 million TLc. 4 million TLO d. 3 million TLTL)17 +616+615+6Suppose that the government had a deficit of 6 million TL and demanded this amount from theloanable funds market. What is the value of private investments that are crowded-out due to thedeficit?O e. 1 million TL14 +613 +612 +611 +6TL)11121314151617

The crowding-out effect describes the decrease in private investment as a result of government…

We have the following data on the loanable funds market in Country B: Real Interest Rate Loanable Funds Demanded (million (%) 1 2 3 4 5 6 7 O a. 5 million TL O b. 2 million TL O c. 4 million TL O d. 3 million TL TL) 17 +6 Suppose that the government had a deficit of 6 million TL and demanded this amount from the loanable funds market. What is the value of private investments that are crowded-out due to the deficit? O e. 1 million TL 16+6 15+6 14+6 13 +6 12 +6 11 +6 Loanable Funds Supplied (million TL) 11 12 13 14 15 16 17

We have the following data on the loanable funds market in Country B: Real Interest Rate Loanable Funds Demanded (million (%) 1 2 3 4 5 6 7 O a. 5 million TL O b. 2 million TL O c. 4 million TL O d. 3 million TL TL) 17 +6 Suppose that the government had a deficit of 6 million TL and demanded this amount from the loanable funds market. What is the value of private investments that are crowded-out due to the deficit? O e. 1 million TL 16+6 15+6 14+6 13 +6 12 +6 11 +6 Loanable Funds Supplied (million TL) 11 12 13 14 15 16 17

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter21: Financial Markets, Saving, And Investment

Section: Chapter Questions

Problem 9P

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Similar questions

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Explain how decreased domestic investments that occur due to a budget deficit will affect future economic growth.
Suppose the economy is closed and consumption of $10,000, taxes are $2000 and government purchases are $3,000 and national saving is $1,500. (Given GDP=$14500, Public saving= -$1000, Private saving=$2500, Investment=$1500). So In the era of covid-19 pandemic, the producers were pessimistic about the returns of capital and reduced their investments. Use a well-labelled diagram of loanable funds market to illustrate and explain the impacts on the equilibrium interest rate and quantity of loanable funds.
1 a. 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 answe
1. Assume that the loanable funds market in country X is currently in equilibrim represented by thegraph of the loanable funds where interest rate is r1 and Quantity of loanable funds as Q1. Assume that, government of Country X, which had a balanced budged now increased their spendingwhile the taxes are constant.GDP = 1,000 million BDT G = 100 million BDT C = 850 million BDTX = 100 million BDT T = 50 million BDT M = 125 million BDTA) What is the level of investment spending and private savings? B) What are amounts of budget balance (deficit/surplus) and net capital inflow? [Hint: net capitalinflow equals the value of imports (M) minus the value of exports (X)] Assume that the government funds the increase in spending through increased borrowingC) What will be the impact of the policy action on the interest rate and quantity of loanable funds?Draw correctly labeled graph D) Given your answer, how will the private sector be affected? Is there any “crowding out”?Explain. (Take help of…