The effect of optimistic future expectations on the loanable fund market.

Question

Recently, the economies of North Korea and Norway have begun to grow very rapidly. This increases their citizens’ income and wealth as well. In turn, these citizens increase their savings not only in their country, but also in the United States. In this case, which of the following statements is correct? A. The supply of loanable funds decreases as savings increase. B. The supply of loanable funds increases as savings increase. C. The demand of loanable funds decreases as savings increase. D. Both supply and demand of loanable funds increase as savings increase.

Answer 1

Question

Chapter 8, Problem 5CQQ

To determine

The effect of optimistic future expectations on the loanable fund market.

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