Real interest rate (percent per year)1020DLF150 300 450 600 750 900Loanable funds (billions of 2009 dollars)In the above figure, technological progress that increases the expected profit willshift the demand for loanable funds curve leftward.shift the demand for loanable funds curve rightward.have no effect on the demand for loanable funds curve.make the demand for loanable funds curve become horizontal.

The loanable fund theory explains the determination of real interest rate. The demand for loan fund…

In the above figure, technological progress that increases the expected profit will O shift the demand for loanable funds curve leftward. O shift the demand for loanable funds curve rightward. O have no effect on the demand for loanable funds curve. O make the demand for loanable funds curve become horizontal.

In the above figure, technological progress that increases the expected profit will O shift the demand for loanable funds curve leftward. O shift the demand for loanable funds curve rightward. O have no effect on the demand for loanable funds curve. O make the demand for loanable funds curve become horizontal.

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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Show the effect on the real interest rate and equilibrium quantity of loanable funds of an increase in the demand for loanable funds and a smaller increase in the supply of loanable funds. Draw a demand for loanable funds curve. Label it DLF. Draw a supply of loanable funds curve. Label it SLF. Draw a point at the equilibrium real interest rate and quantity of loanable funds. Label it 1. Real interest rate (percent per year) 12.0 Draw a curve that shows an increase in the demand for loanable funds. Label it DLF,. 10.0- Draw a curve that shows a smaller increase in the supply of loanable funds. Label it SLF,. Draw a point at the new equilibrium real interest rate and quantity of loanable funds. Label it 2. 8.0- 6.0- 4.0- 2.0- 0.0+ 0.0 1.0 2.0 3.0 Loanable funds (trillions of 2012 dollars) 4.0 5.0 >>> Draw only the objects specified in the question. Click the graph, choose a tool in the palette and follow the instructions to create your graph. MacBook Air DD DII F11 F10 F9 000 000 F8 F7…
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. decreases the demand for loanable funds and shifts the demand curve leftward B. decreases the quantity of loanable funds demanded up along the demand curve C. increases the demand for loanable funds and shifts the demand curve rightward D. increases the quantity of loanable funds demanded down along the demand curve Thanks!
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.
Indicate the Quantity demanded and Quantity supplied of loanable funds if the Interest rates increases by 2% (from the equilibrium rate). would changed in interest rate cause a movement along the curve or shift? Interest rate 24% 22 20 ' 18 16 14 12 10 a 6 4 2 Y S ° $200 $400 600 D 800 1,000 1,200 Quantity of leanable funds (billions of dollars) Indicate the Quantity demanded and Quantity supplied of loanable funds if the Interest rates increases by 2% (from the equilibrium rate). would changed in interest rate cause a movement along the curve or shift?
The table below shows Demand and Supply for loanable fund at given time. Real interest rate Quantity of loanable fund demanded (billion $) Quantity of loanable fund supplied (billion $) 0.01 1000 400 0.02 950 450 0.03 900 500 0.04 850 550 0.05 800 600 0.06 750 650 0.07 700 700 0.08 650 750 0.09 600 800 0.10 550 850 0.11 500 900 0.12 450 950 0.13 400 1000 0.14 350 1050 0.15 300 1100 Instructions: Using excel, find the equilibrium real interest rate and quantity of loanable fund. show the equilibrium on a graph. If this country experiences a recession business cycle phase that decreases the demand for loanable fund by $200 billion. Find the new equilibrium real interest rate and quantity of loanable fund. Show the shift on the graph. list Two factors that shift SLF rightward and two factors that shift DLF rightward What is the meaning of crowding out?…
The following graph shows the supply and demand curves in the market for loanable funds when actual inflation and expected inflation are zero, Suppose the expected inflation rate increases to 1%. Adjust the following graph to show the effect of this increase in the expected inflation rate. INTEREST RATE 9 200 300 QUANTITY OF LOANABLE FUNDS 100 400 Du 2
Loanable fund graph- show the result of a fiscal, crowding out and the effect on the supply of loanable funds
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Graphically Show each scenario of the market for loanable funds and graph the supply and demand for each of the 4 scenarios. Draw the shift occurring (Supply or Demand) and explain what happens to the equilibrium interest rate in for each of the 4 scenarios 1. A breakthrough in medical technology results in many hospitals wanting to buy new equipment. 2. The government budget deficit is reduced by 50%. 3. Foreign investors buy residential property in the United States. 4. People around the world are worried about financial stability in their countries and choose to move their wealth to U.S. financial markets.
What is market for loanable funds? Use the analysis of market for loanable fund to analyse the impact of saving incentives and government budget (deficits) toward the interest rate and quantity of loanable funds! (Explain your answer by using graphical approach)
#18. What would happen in the market for loanable funds if the government were to increase the tax on interest income? a The supply of loanable funds would shift right. b The demand for loanable funds would shift right. c The supply of loanable funds would shift left. d The demand for loanable funds would shift left.