5. The market for loanable funds and government policy The following graph shows the loanable funds market. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Consider each scenario separately by returning the graph to its starting position when moving from one scenario to the next. (Note: You will not be graded on any changes you make to the graph.) INTEREST RATE (Percent) Demand LOANABLE FUNDS (Billions of dollars) Supply Demand Supply (?
Q: 6. Suppose individuals specialize in tasks (jobs) for which they have a comparative advantage and…
A: Trade is the exchange of commodities and services between people, companies, or nations in the…
Q: 10. (a) (c) 1/3 1/3 Derek has utility for good 1 and good 2 given by u = x₁x₂ dx2? What is Derek's…
A: Utility function is the function in which a combination of two commodities are given and plotted…
Q: A-Design Inc., a federally incorporated company in Canada, specializing in the design and…
A: Cash flow:The sum of the total money is represented in the diagram. It represents the magnitude and…
Q: Could you add some graphs as wel
A: The economy of South Africa is a dynamic, multifaceted system that has a big impact on both the…
Q: readings: Rousseau, Selection from A Discourse on Political Economy; Rousseau, Selections from…
A: According to the paragraph from Mary Wollstonecraft's "A Vindication of the Rights of Woman," the…
Q: Problem 3 The government of Indiana makes flu shots available to anybody in the state free of…
A: The objective of the question is to understand why flu shots, despite being provided free of charge…
Q: Suppose that when a firm hires one additional unit of labour, total product increases from 100 to…
A: Marginal product refers to the additional product of output by employing one additional input while…
Q: K Refer to Figure 6.3. On this graph, the total surplus of the market is maximized when the price is…
A: In economics, "surplus" implies the difference between what is available or produced and what is…
Q: The Equivalence of Expenditure and Income (in Billions of Dollars) Expenditure C: Consumer goods and…
A: When comparing the economic performance of other nations, monitoring economic growth over time, and…
Q: Refer to the indifference curve in Figure 3.3. Which of the following statements is correct? O This…
A: The indifference curve shows the different combinations of two goods that give the same level of…
Q: Brics– what are the macro factors and their impact and provide examples.
A: BRICS is an acronym referring to the five major emerging economies: Brazil, Russia, India, China,…
Q: reach of the following scenarios, what would happen to total revenue after a price increase? Place…
A: Total revenue rises when the price is increased on items with inelastic demand. A rise in prices…
Q: Bank deposits at a bank are considered Select the correct answer below: liabilities assets reserves…
A: People, companies, or institutions put money in banks for safety, quick access, and to earn…
Q: he Hamas-Israel Conflict – what are the macro factors and their impact and provide example
A: The issue has to do with geopolitics, international relations, and the Middle East war. It mostly…
Q: Education benefits both students and the community. Suppose students purchasing education consider…
A: In the field of economics, social benefit pertains to the effect or usefulness that an economic…
Q: Consider the market for meekers in the imaginary economy of Meekertown. In the absence of…
A: An economic strategy known as free trade promotes the flow of products and services between nations…
Q: Which of the following statements best describes the figure shown?
A: This can be defined as a concept that shows the total demand for the products and services in a…
Q: Which of the following fiscal policy actions would be appropriate if the economy is experiencing an…
A: Fiscal policy is a macroeconomic policy tool that governments utilize to impact an economy's overall…
Q: The function E sold. Find a) the profit when 75 units are sold + 1900z 3000 gives the profit when a…
A: Profit:Profit is the money earned after all the costs or expenditures are deducted from the revenue.…
Q: The total cost of a firm is TC= 100+q2. In a perfectly competitive market, the long- run equilibrium…
A: Perfectly Competitive Market:The entry of new firms in a perfectly competitive market continues as…
Q: Which of the following is true regarding monopolistic competition? Ⓒa. Each firm behaves as a…
A: Monopolistic competition is a market structure where many firms produce products that are similar…
Q: A small firm intends to increase the capacity of a bottleneck operation for producing a product by…
A: The total cost function for alternative A is:TC _A = FC _A + VC * Q = 60000 + 20Qwhere:TC _A is the…
Q: The graph shown displays the cost curves for a firm in a perfectly competitive market. If the market…
A: This firm will earn positive profits in the short run.This statement is true. At a market price of…
Q: Suppose the government declares that a gallon of milk MUST cost $10. As a result of this new decree:…
A: Demand is defined as the desire backed by the willingness and ability to pay by the consumers. If…
Q: Answer true or false to the following: If adding a unit of labor increases output (q) then AP must…
A: Average Product (AP) represents the output per unit of input. In the context of labor, it’s the…
Q: The marginal propensity to expend is 0.5 and there is a recessionary gap of $200. What fiscal policy…
A: The level of marginal propensity to expend is given as 0.5.The recessionary gap is given as $200The…
Q: Fiscal policy can take much longer to act than monetary policy given there are lags that can occur…
A: Fiscal Policy is the policy formulated by the central government of the nation to control the…
Q: Which of the following results from providers having more information about treatment alternatives…
A: Adverse selection is a concept in economics and insurance that describes a situation where one party…
Q: Sixty percent (60%) of Students of the Reginal College were took French. Fifteen (15) were randomly…
A: Probability is a measure of how likely something is to happen. In the context of mathematics and…
Q: Suppose the figure to the right represents the market for a particular brand of soap such as Zest,…
A: A market structure known as monopolistic competition blends aspects of perfect and monopoly…
Q: Use the following to answer questions 24-25: Andrew's utility function is U (x₁. x2) = x1x2. Every…
A: Utility:The utility is want satisfying power of a commodity. It can be expressed in cardinal and…
Q: ove figure shows the reaction functions for two pizza shops in a small isolated town. Identify the…
A: Cournot oligopoly Model assumes that there are two firms in market and these firms compete on basis…
Q: A local college is deciding whether to conduct a campus beautification initiative that would involve…
A: Willingness -to-pay: The maximum amount of money an individual is willing to spend or pay for a…
Q: Read the excerpt from "First Generation" of Dreaming in Cuban, by Cristina Garcia. She considers the…
A: Cristina Garcia's "First Generation" of "Dreaming in Cuban" contains an excerpt where the author…
Q: Suppose that for a monopoly average total cost is $35, marginal cost is $30, and marginal revenue is…
A: Monopoly market is where only seller dominates the market and controls every aspect of market…
Q: If the money supply is MS2 and the price level is 2, there is excess demand equal to distance AC.…
A: Among all assets, money is the most liquid. This kind of capital asset is the most fundamental. It…
Q: Recall the power law: Y=kX-a or equivalently logY=logk-alog.X Suppose that using the data, you plug…
A: The issue you raised has to do with statistical modeling and income distribution; more precisely, it…
Q: the strategy profile (A,CF) is In this game, the strategy profile (A,CE) is In this game, the…
A: In game theory, a Nash equilibrium is a fundamental notion. It illustrates a circumstance in a…
Q: If the Fed wishes to decrease the money supply. Multiple Choice O increase the reserve requirement…
A: Fed refers to the "federal reserve system" which is the central bank of the united states. It plays…
Q: In Windsor, Ontario, a Big Mac from McDonald's costs C$4.17 (Canadian dollars), and across the…
A: Purchasing Power Parity, as the name suggests, is the measure of defining parity among the…
Q: the question(s) that follow. SCENARIO 3.3: -Mustard and mayonnaise are substitutes. -Mustard and…
A: “Since you have posted multiple questions, we will provide the solution only to the first question…
Q: -uppose John is currently at point A on the indifference curve to the right. If he moves to point B,…
A: Indifference curve refer to such curve that represent the combination of two goods and every…
Q: please provide correct answers. i will upvote. thank you!
A: The objective of the question is to find the optimal contract length when the marginal cost of…
Q: QUESTION 15 Which of the following will cause the Australian dollar (AUD) to appreciate against the…
A: The overall quantity demanded in a market is the product of the individual quantities that each and…
Q: In the circular flow of economic activity, there are two kinds of markets in which firms and…
A: The unending cycle of capital and money movement through an economy is known as the "circular flow…
Q: 4) Consider the two diagrams below. First diagram represents a typical firm in a purely competitive…
A: Perfect competition is a market structure in economics characterized by a large number of buyers and…
Q: Figure 4.2 O there is waste. O it is very difficult and very expensive to increase output once the…
A: TC represents "Total Cost." A financial statistic called total cost is used in business and…
Q: 7. Economic costs and benefits of a common currency Identify whether each attribute in the following…
A: A common currency is a largely accepted currency between two or more countries engaged in…
Q: The side effect of an action that increases the well-being of others is called ah augmentation. an…
A: Positive externality is a beneficial side effect of an action on others.
Q: In the case of a binding price ceiling, the price paid in the market will be: more than the free…
A: A price ceiling is an imposed breaking point on the price charged for a product. Governments…
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 3 images
- U3e the tollowing graph to show the effects on the Market for Loanable Funds of businesses discovering they have more than enough capital to meet the demand for their goods: Instructions: Drag the demand curve to illustrate the appropriate change in demand. Market for Loanable Funds Interest Rate 100 Supply (Savings) 90 80 70 60 50 Demand (Investment) 40 30 20 10 10 20 30 40 50 60 70 80 90 100 Dollar volume of Savings, Investment5. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (Note: You will not be graded on any changes you make to the graph.) Customize and control Google Chrome Supply Demand Supply Demand LOANABLE FUNDS (Billions of dollars) Scenario 1: Individual Retirement Accounts (IRAS) allow people to shelter some of their income from taxation. Suppose the maximum annual contribution to such accounts is $5,000 per person. Now suppose there is an increase in the maximum contribution, from $5,000 to $8,000 per year. INTEREST RATE (Percent)Draw a graph depicting interest rates at the quantity of loanable funds. Answer the following questions regarding this graph. Explain why the supply of loanable funds is upward sloping. Explain why the demand of loanable funds is downward sloping. If the Federal Reserve sells government bonds, show what will happen to this graph. Explain the effects on interest rates and the quantity of loanable funds. If the Federal Reserve lowers the required reserve rate, show what will happen to this graph. Explain the effects on interest rates and the quantity of loanable funds.
- 5. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (Note: You will not be graded on any changes you make to the graph.) INTEREST RATE (Percent) Supply Demand LOANABLE FUNDS (Billions of dollars) Demand Supply (?) Scenario 1: Individual Retirement Accounts (IRAS) allow people to shelter some of their income from taxation. Suppose the maximum annual contribution to such accounts is $5,000 per person. Now suppose there is a decrease in the maximum contribution, from $5,000 to $3,000 per year.4. The market for loanable funds and government policy The following graph shows the loanable funds market. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Consider each scenario separately by returning the graph to its starting position when moving from one scenario to the next. (Note: You will not be graded on any changes you make to the graph.) INTEREST RATE (Percent) Supply LOANABLE FUNDS (Billions of dollars) Demand Demand Supply5. The market for loanable funds and government policy The following graph shows the loanable funds market. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Consider each scenario separately by returning the graph to its starting position when moving from one scenario to the next. (Note: You will not be graded on any changes you make to the graph.) INTEREST RATE (Percent) Supply Demand LOANABLE FUNDS (Billions of dollars) Demand Supply
- 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.EXERCISE 10.9 LIMITS ON LENDING Many countries have policies that limit how much interest a moneylender can charge on a loan. Do you think these limits are a good idea? Who benefits from the laws and who loses? What are likely to be the long-term effects of such laws? Tips: For Question 2, you may think about how a low interest rate would affect the poor and those who owe huge debts. For Question 3, you may think about how it would affect the profitability of the banking sector and the supply of lending (will lenders be encouraged to lend more?), and what implications it may have for "credit rationing" (being credit constrained).Show how an increase in the supply of loanable funds and a decrease in the demand for loanable funds can lower the real interest rate and leave the Real interest rate (percent per year) 12- equilibrium quantity of loanable funds unchanged. 10- 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. 8- 6- Draw a curve that shows a decrease in the demand for loanable funds. Label it DLF,. Draw a curve that shows an increase in the supply of loanable funds. Draw it in such a way that the equilibrium quantity of loanable funds does not change. Label it SLF,. 4- 2- Draw a point at the new equilibrium real interest rate and quantity of loanable funds. Label it 2. 0- Loanable funds (trillions of 2007 dollars) >>> Draw only the objects specified in the question.
- Suppose the government borrows $20 million more next year than this year. a. Draw and fully label a diagram to illustrate the market for loanable fund to analyze this policy. How does the elasticity of the supply of loanable funds affect the size of these changes? How does the elasticity of the demand of loanable funds affect the size of these changes?4. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (Note: You will not be graded on any changes you make to the graph.) Demand Supply 1 INTEREST RATE (Percent) Demand LOANABLE FUNDS (Billions of dollars) Supply8- Describe how the following statements affect either the supply or the demand for loanable funds. For each statement below, do the following: Explain whether the event affects either the demand or the supply of loanable funds. Describe how the statement will affect the equilibrium interest rate and quantity of loanable funds. Draw a graph to demonstrate each answer. Please remember to label each part of the graph. Indicate the change in the interest rate and the quantity of loanable funds on your graph. Analyze each event independently. (Hint: Review the slides and recordings of Lecture 4 for similar graphical analysis). Statements: a) "The national-level saving rate is important from a macroeconomic perspective, in the sense that higher savings tend to strengthen the economy over the long run." b) “Slow-trend growth is reducing the opportunities for profitable long-term investments. The recent downturn in business investment was less of a cyclical blip than a sign of things to…