The reason for savings rate being negative; the reason for a negative saving rate can be a problem and the way in which savings in the U.S. can be increased.

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Chapter 26, Problem 6IAPA

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The reason for savings rate being negative; the reason for a negative saving rate can be a problem and the way in which savings in the U.S. can be increased.

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Other things the same, people in the U.S. would want to save more if the real interest rate in the U.S. a. fell. The increased saving would increase the quantity of loanable funds demanded.b. fell. The increased saving would increase the quantity of loanable funds supplied.c. rose. The increased saving would increase the quantity of loanable funds demanded.d. rose. The increased saving would increase the quantity of loanable funds supplied.

The Economist article, "Low interest rates leave savers with few good options", states that savers are likely to respond to low rates in one of the following three ways: Lincrease athletic activity, go back to school, or, spend more on entertainment O re-watch the movie Trading Places, invest in Treasury bills, or, move to Germany save more and spend less, set aside less money due to higher returns, or, decrease investments in risky assets save less and spend more, set aside more money to make up for low returns, or, increase investments in risky assets

Draw a graph of the supply and demand of loanable funds. Then, show how the interest rate will be affected when the following scenarios occur: a. The government implements a program that reduces investment tax credits. b. The government budget deficit is reduced by 30%. (Hint: Does the government still need to borrow?) c. More foreigners are saving their money in U.S. banks.

Answer 2

Question

Chapter 26, Problem 6IAPA

To determine

To explain:

The reason for savings rate being negative; the reason for a negative saving rate can be a problem and the way in which savings in the U.S. can be increased.

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Answer 3

Question

Chapter 26, Problem 6IAPA

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To explain:

The reason for savings rate being negative; the reason for a negative saving rate can be a problem and the way in which savings in the U.S. can be increased.

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Answer 4

Question

Chapter 26, Problem 6IAPA

To determine

To explain:

The reason for savings rate being negative; the reason for a negative saving rate can be a problem and the way in which savings in the U.S. can be increased.

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Answer 5

Chapter 26, Problem 6IAPA

To determine

To explain:

The reason for savings rate being negative; the reason for a negative saving rate can be a problem and the way in which savings in the U.S. can be increased.

Answer 6

Chapter 26, Problem 6IAPA

To determine

To explain:

The reason for savings rate being negative; the reason for a negative saving rate can be a problem and the way in which savings in the U.S. can be increased.

Answer 7

Chapter 26, Problem 6IAPA

To determine

To explain:

The reason for savings rate being negative; the reason for a negative saving rate can be a problem and the way in which savings in the U.S. can be increased.

Answer 8

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Answer 9

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Answer 11

Ch. 26 - Prob. 1SPPA Ch. 26 - Prob. 2SPPA Ch. 26 - Prob. 3SPPA Ch. 26 - Prob. 4SPPA Ch. 26 - Prob. 5SPPA Ch. 26 - Prob. 6SPPA Ch. 26 - Prob. 7SPPA Ch. 26 - Prob. 8SPPA Ch. 26 - Prob. 9SPPA Ch. 26 - Prob. 1IAPA

The reason for savings rate being negative; the reason for a negative saving rate can be a problem and the way in which savings in the U.S. can be increased.

Solution Summary: The author explains the reasons for a negative savings rate in the U.S. and how it can be increased.

To explain:

The reason for savings rate being negative; the reason for a negative saving rate can be a problem and the way in which savings in the U.S. can be increased.

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Chapter 26 Solutions

The reason for savings rate being negative; the reason for a negative saving rate can be a problem and the way in which savings in the U.S. can be increased.

Solution Summary: The author explains the reasons for a negative savings rate in the U.S. and how it can be increased.

To explain: The reason for savings rate being negative; the reason for a negative saving rate can be a problem and the way in which savings in the U.S. can be increased.

Want to see the full answer?

Chapter 26 Solutions

To explain:

The reason for savings rate being negative; the reason for a negative saving rate can be a problem and the way in which savings in the U.S. can be increased.