12. Suppose the interest rate decreases. Other things constant, how will the loanable funds market be affected? a. The demand for loanable funds curve will shift to the right. b. The demand for loanable funds curve will shift to the left. c. The quantity of loanable funds demanded will increase. d. The quantity of loanable funds supplied will increase. 13. Suppose a research lab fired a chemist, and then an environmental protection group hired the chemist at the same salary. What would be the net effect of these events on aggregate demand? a. The aggregate demand would shift rightward. b. The aggregate c. The aggregate demand would shift leftward. demand would become steeper. demand would remain the same.

12. Suppose the interest rate decreases. Other things constant, how will the loanable funds market be affected? a. The demand for loanable funds curve will shift to the right. b. The demand for loanable funds curve will shift to the left. c. The quantity of loanable funds demanded will increase. d. The quantity of loanable funds supplied will increase. 13. Suppose a research lab fired a chemist, and then an environmental protection group hired the chemist at the same salary. What would be the net effect of these events on aggregate demand? a. The aggregate demand would shift rightward. b. The aggregate c. The aggregate demand would shift leftward. demand would become steeper. demand would remain the same.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter21: Financial Markets, Saving, And Investment

Section: Chapter Questions

Problem 6P

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Similar questions

Qu Listen In which situation do you NOT contribute to the supply of loanable funds? a) You charge a vacation on a credit card. b) You pay off your mortgage. c) You open a new savings account. d) You make the final payment on your private student loan.
1. Using the market for loanable fund diagram, show graphically and explain how the interest rate and investment are affected in each of the following cases. (Draw a separate diagram for each.)i. Tax on interest income decreases.ii. Government is running a budget surplus.iii. Investment tax credit falls.
If and when the demand of loanable funds shifts to the left: Group of answer choices 1. This is good news for people who rely on the interest earnings from their savings but bad news for people who have outstanding home loans. 2. This is bad news for people who rely on the interest earnings from their savings but good news for people who have outstanding home loans. 3. This is good news both for people who rely on the interest earnings from their savings as well as those who have outstanding home loans. 4. This is bad news both for people who rely on the interest earnings from their savings as well as those who have outstanding home loans.
1. In the model of the market for loanable funds, which of the following best describes why the supply curve is upward sloping? a The higher the interest rate, the more likely households are to spend b The higher the interest rate, the less likely firms are invest c The higher the interest rate, the more likely households are to borrow d The higher the interest rate, the more likely households are to save
1. What happens to the quantity of loanable funds supplied when the interest rate rises? Explain why this change happens
The demand for loanable funds has a ________ slope because the lower the interest rate, the ________ number of investment projects are profitable, and the ________ the quantity of loanable funds demanded. A. negative; lesser; greater B. positive; lesser; lesser C. negative; greater; greater D. positive; greater; greater E. negative; greater; lesser QUESTION 14 The statement "This Dell laptop costs $1,200" illustrates which function of money? A. Liquidity. B. Medium of exchange. C. Standard of deferred payment. D. Store of value. E. Unit of account.
In the loanable funds market, if firms become more optimistic about future profitability, then the a demand for loanable funds will increase, interest rates will increase, and private sector investment spending will increase. b demand for loanable funds will decrease, interest rates will decrease, and the equilibrium quantity of borrowing will decrease. c supply of loanable funds will increase, interest rates will decrease, and the equilibrium quantity of borrowing will increase. d supply of loanable funds will increase, interest rates will increase, and private sector investment spending will increase.
Consider the market for loanable fund. Answer the question below. 2.a. The market equilibrium interest rate is 3%. But current interest rate is 4%. Then, is the supply of loanable fund larger, smaller or equal to the demand for loanable fund? 2.b. People’s preference for saving increased. Answer if the equilibrium interest rate and investment would increase, decrease, or would not change. Interest rate: Investment:
2. According to the textbook, which of the following statements is (are) correct? (x) The price of loanable funds is the interest rate and the interest rate is determined by the forces of supply and demand in the loanable funds market. (y) The supply of loanable funds slopes upward because an increase in the interest rate provides an incentive for people to save more. (z) The demand for loanable funds slopes downward because a decrease in the interest rate provides an incentive for people to borrow more. A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only E. (x) only 4. Suppose a surplus of loanable funds exists at the present interest rate in the loanable funds market. Given the presence of this disequilibrium, A. the supply of loanable funds will shift to the right and the demand will shift to the left. B. the supply of loanable funds will shift to the left and the demand will shift to the right. C. both the supply of loanable funds and the demand will…
Consider the supply and the demand in the market for loanable fund. If Mari purchased construction company’s stocks, to which is it added: Supply or Demand? If Mari borrowed to build her new house, which is it added to: Supply or Demand? Stock: House:
What is the effect of a fall in the real interest rate on the demand for loanable funds? A fall in the real interest rate _______. A. increases the quantity of loanable funds demanded down along the demand curve B. decreases the quantity of loanable funds demanded up along the demand curve C. decreases the demand for loanable funds and shifts the demand curve leftward D. increases the demand for loanable funds and shifts the demand curve rightward
Which of the following reasons could cause the demand curve for loanable funds to shift to the right from DLF to D¹LF in the figure? Wage $11 8 X 3400 2700 D 4500 Quantity of labor The economy is expected to boom, thereby increasing investment returns. O Larger investment projects with potentially higher returns get funded. Falling interest rates make it less expensive for firms to borrow. Rising interest rates make it more attractive for savers to save.