Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 24.4, Problem 1RQ
To determine
Explain the influence of budget surplus or budget deficit on the loanable funds market.
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How does an increase in government borrowing affect the equilibrium interest rate in the market for loanable funds?
Using a graph representing the market for loanable funds, show and explain what happens tointerest rates and investment if a government goes from a deficit to a surplus.
Explain the government budget deficit and debt and how this can cause crowding out for loanable funds in the market.
Chapter 24 Solutions
Macroeconomics
Ch. 24.1 - Prob. 1RQCh. 24.1 - Prob. 2RQCh. 24.1 - Prob. 3RQCh. 24.1 - Prob. 4RQCh. 24.2 - Prob. 1RQCh. 24.2 - Prob. 2RQCh. 24.2 - Prob. 3RQCh. 24.2 - Prob. 4RQCh. 24.2 - Prob. 5RQCh. 24.3 - Prob. 1RQ
Ch. 24.3 - Prob. 2RQCh. 24.3 - Prob. 3RQCh. 24.3 - Prob. 4RQCh. 24.3 - Prob. 5RQCh. 24.3 - Prob. 6RQCh. 24.4 - Prob. 1RQCh. 24.4 - Prob. 2RQCh. 24.4 - Prob. 3RQCh. 24 - Prob. 1SPACh. 24 - Prob. 2SPACh. 24 - Prob. 3SPACh. 24 - Prob. 4SPACh. 24 - Prob. 5SPACh. 24 - Prob. 6SPACh. 24 - Prob. 7SPACh. 24 - Prob. 8SPACh. 24 - Prob. 9SPACh. 24 - Prob. 10SPACh. 24 - Prob. 11SPACh. 24 - Prob. 12SPACh. 24 - Prob. 13APACh. 24 - Prob. 14APACh. 24 - Prob. 15APACh. 24 - Prob. 16APACh. 24 - Prob. 17APACh. 24 - Prob. 18APACh. 24 - Prob. 19APACh. 24 - Prob. 20APACh. 24 - Prob. 21APACh. 24 - Prob. 22APACh. 24 - Prob. 23APACh. 24 - Prob. 24APACh. 24 - Prob. 25APACh. 24 - Prob. 26APACh. 24 - Prob. 27APACh. 24 - Prob. 28APACh. 24 - Prob. 29APACh. 24 - Prob. 30APA
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- What is a budget deficit? How does it affect interest rates, investments and economic growth?arrow_forwardlist the factors that affect the demand side of the loanable funds market. which factors shift the curve?arrow_forwardWhat impact will an increase of government borrowing have on the Market for Loanable Funds? A) Increase Supply B) Decrease Supply C) Decrease Demand D) Increase Demandarrow_forward
- Loanable fund graph- show the result of a fiscal, crowding out and the effect on the supply of loanable fundsarrow_forwardHow will you identify budget deficits?arrow_forwardCollaboration with Congress during the Clinton Administration allowed for an aggressive deficit-cutting plan to pass. As a result, the government was able to reach a balanced budget at the end of the 90's. Move the supply and/or demand curves to describe the expected effect that this deficit-reduction likely had upon the loanable funds market. As a result, private investment should have a) decreased as the cost of borrowing increased. b) increased as the cost of borrowing increased. c) increased because the cost of borrowing decreased. d) decreased as the cost of borrowing decreased.arrow_forward
- Using a graph representing the market for loanable funds, show and explain what happens to interest rates and investment if: a reduction in military spending moves the government’s budget from deficit into surplus.arrow_forwardhow will cancelling student debt help impact the economyarrow_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
- how will cancelling student debt harm the economyarrow_forwardWhat must have happened in the loanable funds market to produce the 2020 level of interest rates what caused this change?arrow_forwardOther things the same, an increase in the budget deficit A. shifts the supply of loanable funds left, so the interest rate rises. B. shifts the demand for loanable funds right, so the interest rate rises. C. shifts the demand for loanable funds left, so the interest rate falls. D. shifts the supply of loanable funds right, so the interest rate falls.arrow_forward
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