Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 21, Problem 4P
To determine
To explain:
The effect on loanable funds
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When the expected profit ________, investment demand ________ and the demand for loanable funds curve shifts ________.
How does an increase in government borrowing affect the equilibrium interest rate in the market for loanable funds?
list the factors that affect the demand side of the loanable funds market. which factors shift the curve?
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- Which factor brings the supply and demand of loanable funds into balance? net capital outflows the real interest rate the futures market for commodities collective bargaining domestic investmentarrow_forwardThe following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. NOTE: the first dropdown question options are (fall or rise), the seconds are (decrease or increase), the thirds are (fall or rise), the fourths are (fall or rise), the fifths are (deficit or surplus), the sixths are (decreases or increases), the sevenths are (fall or rise), and the last ones is (crowding out ot increasing)arrow_forwardProvide two examples of changes in the market for loanable funds that can result in a change in the level of interest rates. Explain how and why the interest rate changes based on the loanable fund theory.arrow_forward
- What impact does the government have in the loanable funds market? Forces that change the demand for investment in turn impact the demand for loanable funds. These forces include the change of government policiesarrow_forwardTextbook: Macroeconomics by P. Krugman & R. Wells (5th Edition) Using the accompanying diagram, explain what will happen to the market for loanable funds when there is a fall of percentage points in the expected future inflation rate. How will the change in the expected future inflation rate affect the equilibrium quantity of loanable funds?arrow_forwardDraw the graph of the effect on the equilibrium in the loanable funds market when corporate taxes increase. Does the demand for loanable funds increase or decrease? Does the interest rate increase of decrease?arrow_forward
- Graphically Show each scenario of the market for loanable funds and graph the supply and demand for each of the 4 scenarios. Draw the shift occurring (Supply or Demand) and explain what happens to the equilibrium interest rate in for each of the 4 scenarios 1. A breakthrough in medical technology results in many hospitals wanting to buy new equipment. 2. The government budget deficit is reduced by 50%. 3. Foreign investors buy residential property in the United States. 4. People around the world are worried about financial stability in their countries and choose to move their wealth to U.S. financial markets.arrow_forwardWhat must have happened in the loanable funds market to produce the 2020 level of interest rates what caused this change?arrow_forward
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