Answered: What is the price of funds in the…

What is the price of funds in the loanable funds market? a. the Consumer Price Index b. the real wage rate c. inflation expectation d. the interest rate e. the GDP price index

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter16: Interest, Rent, And Profit

Section16.1: Interest

Problem 1ST

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Concept explainers

Public Saving

Public saving deals with the amount which has been in excess after meeting all the obligatory expenses and investment of the government. Taxes are collected by the government to meet its day-to-day expenditures. The obligatory expenses include all those expenses which are mandatory for the government. It cannot be avoided as it is inevitable.

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What is the price of funds in the loanable funds
market?
a. the Consumer Price Index
b. the real wage rate
c. inflation expectation
d. the interest rate
e. the GDP price index

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In 1981, many interest rates in the United States were 15%, but the inflation rate was 10%. In 2015, many interest rates were less than 1%, and the inflation rate was 2%. a. What were the real interest rates in 1981 and 2015? b. all else equal, how does the drop in interest rates between 1981 and 2015 affect the quantity of loanable funds supplied?
Select the true statement or statements regarding the loanable funds market. a.The purchase of stocks and bonds is considered savings. b.Savings from households are used by firms and governments to finance investment. c.Savings refers to savings accounts held in banks only. d.Foreign entities cannot save in the United States.
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