if households become thriftier and save a larger portion of their income how will this change affect the equilibrium interest rate in the loanable funds market a.interest rate falls b. interest rate rises c. interest rate remains u changed d. the change depends of the investment curve
Added by Katelyn B.
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In this market, the supply of loanable funds comes from savings, while the demand for loanable funds comes from borrowers (such as businesses and households seeking loans for investment). Show more…
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Caroline M.
The graph below depicts the loanable funds market in the United States. The interest rate is measured in percent, and quantity is measured in billions of dollars. The supply curve, S2, represents the savings by U.S. households. The demand curve, D1, represents investment spending by U.S. firms on capital projects. Consider the graph from Part 1. If the market is in equilibrium, what will happen to the interest rate and the quantity of funds borrowed in the loanable funds market if the U.S. government needs to borrow $80 billion to finance an infrastructure project? The interest rate will (stay the same/ increase/ decrease). The quantity will (stay the same/ increase/ decrease).
Crystal W.
An increase in the real interest rate a. shifts the supply of loanable funds curve to the right. b. shifts the supply of loanable funds curve to the left. c. shifts the loanable funds demand curve to the right. d. shifts the loanable funds demand curve to the left. e. does none of the above.
Financial Markets, Saving, and Investment
Multiple Choice
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