Suppose there is an increase in the interest rate in the financial markets. What effect will this have on income? Use a diagram to support your answer.
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Suppose there is an increase in the interest rate in the financial markets. What effect will this have on income? Use a diagram to support your answer.
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- Predict how each of the following economic changes will affect the equilibrium price and quantity in the financial market for home loans. Sketch a demand and supply diagram to support your answers. Because of a threat of war, people become uncertain about their economic future. The overall level of saving in the economy diminishes. The federal government changes its bank regulations in a way that makes it cheaper and easier for banks to make home loans.In the financial market, what causes a movement along the demand curve? What causes a shift in the demand curve?Predict how each of the following economic changes will affect the equilibrium price and quantity in the financial market for home loans. Which curve will shift: supply or demand? In which direction will the curve shift: right or left? (It may help to use a demand and supply diagram to conduct your analysis.) a. The number of people at the most common ages for home-buying decreases. b. Rents rise extremely rapidly. c. Banks that have made home loans find that a larger number of people than they expected are not repaying those loans. d. Because of a threat of a war, people become uncertain about their economic future.The overall level of saving in the economy diminishes. e. The federal government changes its bank regulations in a way that makes it cheaper and easier for banks to make home loans.
- Use the following graph to show the effects on the Market for Loanable Funds of many people deciding to play the lottery rather than save money for retirement: Instructions: Drag the supply curve to illustrate the appropriate change in supply. Market for Loanable Funds Interest Rate 100 90 Supply (Savings) 80 70 60 50 Demand (Investment) 40 30 20 10 10 20 30 40 50 60 70 80 90 100 Dollar volume of Savings, InvestmentExplain in a few paragraphs why interest rates have recently been increased in Australia? Use economic theory and models.How does an increase in interest rates affect business? Consumers?
- If interest rates increase in financial markets, then... Group of answer choices Eli’s trucking company is likely to borrow more money than planned, which would increase the supply of money Guido Pizzeria is likely to borrow less money to renovate and the quantity supplied increases. Omar is likely to deposit more money in his savings account and the quantity supplied increases. Kim is likely to save less, which would increase the supply of moneyWhy is savings equal to investmentSuppose the government borrows $20 million more next year than this year. 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?