The figure depicts a supply-of-loanable-funds curve and two demand-for-loanable-funds curves.INTEREST RATELOANABLE FUNDSSupplyD₂D₁Which of the following events would shift the demand curve from D₂ to D₁? Oa.A change in the tax laws encourages people to consume less and save more.b.Firms become pessimistic about the future and, as a result, they plan to decreasetheir purchases of new equipment and construction of new factories.The government instituted an investment tax credit for firmsOd.The government goes from running a budget deficit to running a budget surplus.

Loanable funds are those available for borrowing or lending in markets or banks. These funds are…

The figure depicts a supply-of-loanable-funds curve and two demand-for-loanable- funds curves. INTEREST RATE LOANABLE FUNDS Supply D₂ D₁ Which of the following events would shift the demand curve from D₂ to D₁?

The figure depicts a supply-of-loanable-funds curve and two demand-for-loanable- funds curves. INTEREST RATE LOANABLE FUNDS Supply D₂ D₁ Which of the following events would shift the demand curve from D₂ to D₁?

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

See similar textbooks

Related questions

Q: Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of…

A: In the language of economics, demand is the amount of an item or service that customers are willing…

Q: iii. What feasible values of s₁ and s₂ maximize the total surplus when the firms select the number…

A: Let's determine the feasible values of s1 and s2 that maximize the total surplus when the firms…

Q: QUESTION 26 A pure monopolist is selling eight units at a price of $20. If the marginal revenue of…

A: A pure monopolist is a single seller with significant market power, able to set prices, faces a…

Q: Consider the production of hamburgers. The average total cost (ATC) and average foxed cost (AFC) of…

A: Variable costs (VC) are expenses that change with the level of production. Variable cost is…

Q: A manager must decide whether to lease a small or large machine for one year. The small machine will…

A: The objective of this question is to find the probability (p) at which leasing the small machine…

Q: Find the revenue deficit if the Revenue Expenditure is $800 and the Revenue receipts is $200 ?

A: All budget expenditures and receipts are classified into two accounts. i) Revenue accountii) Capital…

Q: The graph shows the market for North Atlantic tuna. The quantity of tuna that fishers catch i…

A: In the language of economics, market equilibrium occurs when producers' willingness to supply an…

Q: 1) The NCAA operates as a(n): A) Natural monopoly. B) For-profit cartel. C) Incidental cartel. D)…

A: The National Collegiate Athletic Association (NCAA) is a governing body that oversees college sports…

Q: How would we compute the present discounted value of payments of $8,000 received three years in the…

A: The present discounted value gives the amount of dollars that an individual is willing to invest for…

Q: 4. Movements along versus shifts of demand curves Consider the market demand for peanut butter…

A: Demand refers to the quantity of goods or services that a consumer is willing and able to buy at a…

Q: "ea under the curve or volume makes sense. ) Transfer the data into an Excel File Put your name in…

A: Marginal cost is the cost incurred by producers while producing one additional unit of product. In…

Q: Price Controls and Quotas ― End of Chapter Problem The Venezuelan government has imposed a price…

A: Consumer surplus is said to occur when consumers get to consume a product where their utility…

Q: Suppose Jayden operates a handicraft pop-up retail shop that sells phone cases. Assume a perfectly…

A: This can be defined as a concept that shows that when a purchaser purchases an extra unit of any…

Q: 5. The market for loanable funds and government policy The following graph shows the loanable funds…

A: The government provides tax credits to consumers or businesses to help them pay less in taxes. Tax…

Q: 1. If the number of people with insurance increases, then what will most likely occur? a. a. a. a.…

A: Insurance is a risk management that protects people from unforeseen events in the future. For…

Q: What happens to the original budget line if the price of good ? doubled? (i.e., Will there be a…

A: A Budget Line is a line of constraint for a consumer. It constrains consumers from consuming and…

Q: A perfectly competitive firm has the following total cost schedule: TC = 0.10² +40. Market demand is…

A: Perfect competitive market:In this market, there are large numbers of buyers and sellers. They sell…

Q: P $14 $12 $10 $8 $6 $4 $2 2 4 S D- MSB 6 8 10 12 10 12 14 Q

A: The loss of economic efficiency that happens when a market's equilibrium is not at the point where…

Q: If the government were to give avocado farmers a $2 subsidy per i amount of the subsidy paid to the…

A: Tax can be defined as the amount that an individual, organisation, or any other entity from their…

Q: A market has four individuals, each considering buying á grill. As a grill-master, and finds a grill…

A: The issue you raised has to do with market pricing and consumer surplus in the context of…

Q: In the used car market with warranties, the equilibrium is a _____ and there is A.) pooling…

A: Equilibrium refers to the market condition at which the quantity demanded is equal to the quantity…

Q: 8. Problems and Applications Q8 Suppose that the government decides to issue tradable permits for a…

A: Externality can be defined as the unintentional, positive or negative effect that an economic…

Q: Question 39 Suppose that the market for labor is initially in equilibrium. An increase in worker…

A: Equilibrium refers to the situation in the market when quantity demanded of labour equals to the…

Q: Please also provide solution to questions 4,5

A: Given , s = 0.3 , = 0.15 , n = 0.04

Q: how do we connect the MPS, MPC, spending multiplier and total change?

A: The multiplier effect describes the impact of an initial change in spending or investment on the…

Q: In 20 the unemployment rate in the United States went as low as 3.7%, as measured by the Bureau of…

A: The unemployment rate measures the % of the labor force that is currently unemployed and seeking…

Q: The curves below reflect information about the average total cost, average fixed cost, average…

A: Average fixed cost is a measure of fixed cost which gives value of fixed cost per unit of…

Q: A group of 10 golfing friends have the following annual incomes: $32,000, $12,000, $56,000,…

A: When analyzing income distribution, the data set is divided into equal parts known as quintiles,…

Q: Demand and supply for television use (pay per view) by choice is described by the following demand…

A: A demand curve shows the relationship between the price of a good and the services and the demand…

Q: 2. Consider the following experimental market: WTA Buyer WTP Seller Aya $1.20 Adil $1.80 Basma $1.20…

A: To determine the equilibrium quantity and price, we need to find the point where the total…

Q: Two fixtures are being considered for a particular job in a manufacturing firm. The pertinent data…

A: Annual worth or AW is referred to as the easy way of understanding the annual amount, for instance,…

Q: 1) Criticism of the Lewis model include a. capitalist profits may go into labor-saving capital,…

A: A wage rate, often simply referred to as "wage," is the amount of money paid to an employee for…

Q: In the short run, profits when a competitive firm shuts down are -$7600, and they are -$550 when the…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Assume that perfectly competitive industry can produce milk at a constant marginal cost of $2.00 per…

A: Monopoly is a form of imperfect competition. There is one firm. The number of consumers is high.…

Q: A new manufacturing facility will produce two products, each of which requires a drilling operation…

A: The equivalent annual cost represents the annual cost of a project or investment over its entire…

Q: Scenario 16-6 Ike's Ice Cream has decided to open a new ice cream parlor in Mayville, MS. The market…

A: Monopolistic competition involves many firms offering differentiated products, engaging in non-price…

Q: Why Innovation is more concentrated in space than production? Are there any European policies that…

A: The problem you initially raised relates to the topic of "Regional Disparities in Innovation" and…

Q: Click on the icon to read the news cip. Explain and draw a graph to illustrate how a fall in…

A: Aggregate demand:Aggregate Demand is when the total number of consumers have the desire to buy…

Q: The demand side of the market for Sprite is comprised of 2 people. These people are William and…

A: Perfect competition is a market structure in which there are many buyers and sellers, all selling an…

Q: If the supply curve for a factor is perfectly inelastic, the payments to the factor are A) wholly…

A: In economics, the concept of factor supply and the nature of payments to factors of production, such…

Q: 1. Smart and Ferrari are both car firms. How do you think these firms differ in the way they go…

A: The queries you asked covered a wide range of business and economic subjects, such as:Business…

Q: Two students go out to lunch and decide to split the bill evenly between them. Each student has a…

A: To determine whether students eat too much, we need to compare their actual food consumption (fi) to…

Q: The Sundance Detective Agency has purchased new surveillance equipment with the following estimates.…

A: The discounted payback period is a capital budgeting technique used to evaluate the time it takes…

Q: The concept of marginal utility: can only be applied to situations in which individuals can choose…

A: Analyzing consumer behavior and resource allocation can be done using marginal utility. The concept…

Q: Price C 8 4 S 4 $ D₂ Quantity of Submarine Sandwiches 5₂ DI Refer to Figure 4-2. Which movement of…

A: a decrease in quantity demanded is a movement along the demand curve in response to a change in…

Q: Consider the following model of a firm. The firm can sell any number of units at the constant price,…

A: Profit for a firm is determined by the difference between the total revenue it earns from selling…

Q: Which of the following is counted in the GNP of the United States? A) the value of services that are…

A: The total value of all goods and services produced by a nation's businesses and citizens, regardless…

Q: 3. Use a graph to demonstrate the circumstances that would prevail in a perfectly competitive market…

A: Perfectly competitive market basically refers to a type of market in which there are a large number…

Q: Which of the following terms describes the set of values, beliefs, rules, language, and institutions…

A: The issue you raised has to do with "Culture" and, to a lesser degree, "Ethnocentrism." It involves…

Q: draw a circular flow diagram where income is $200m consumption is $120m, tax/government spending is…

A: Keynesianism has grown in the postwar century in terms of its ability to alleviate economic…

Question

The figure depicts a supply-of-loanable-funds curve and two demand-for-loanable-
funds curves.
INTEREST RATE
LOANABLE FUNDS
Supply
D₂
D₁
Which of the following events would shift the demand curve from D₂ to D₁?

Oa.
A change in the tax laws encourages people to consume less and save more.
b.
Firms become pessimistic about the future and, as a result, they plan to decrease
their purchases of new equipment and construction of new factories.
The government instituted an investment tax credit for firms
Od.
The government goes from running a budget deficit to running a budget surplus.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Define loanable funds

VIEW

Step 2: Explanation of correct answer

VIEW

Step 3: Explanation of wrong options

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Draw the diagram for the loanable funds model. Suppose the tax laws are altered to providemore incentives for private saving (assume that total tax revenue T does not change). Whathappens to the interest rate and investment?
Suppose the government changes the tax code, allowing individuals to reduce their taxable income if they save money in registered retirement savings plans (RRSPs). Your response should answer the following questions: State and explain which loanable funds curve would this policy affect? Which way would the loanable funds curve shift? What would be the impact on interest rates? Draw the loanable funds diagram to illustrate your answers for a to c.
Use the analysis for the market for loanable funds diagram to illustrate and explain how thefollowing government policy affect the economy’s saving and investment. Policy 1: Suppose thegovernment changes the tax code, allowing individuals to reduce their taxable income if they savemoney in registered retirement savings plans (RRSPs). Your response should answer the following questions:a. State and explain which loanable funds curve would this policy affect? b. Which way would the loanable funds curve shift? c. What would be the impact on interest rates? Draw the loanable funds diagram to illustrate your answers for a to c.
Use the analysis for the market for loanable funds diagram to illustrate and explain how thefollowing government policy affect the economy’s saving and investment. Policy 1: Suppose the government changes the tax code, allowing individuals to reduce their taxable income if they save money in registered retirement savings plans (RRSPs). Your response should answer the following questions: a. State and explain which loanable funds curve would this policy affect? b. Which way would the loanable funds curve shift? c. What would be the impact on interest rates? Draw the loanable funds diagram to illustrate your answers for a to c.
Using the graph of the loanable funds market below, if the supply of loanable funds increases from SFL and the demand for loanable funds increases from DLF, then the equilibrium interest rate will D'LF DuF Qo Q. Q2 QuF decrease to i2. O remain at i0. increase temporarily and then decrease. O increase to i1.
1 a. Suppose there are two types of investment in the economy: business fixed investment and residential investment. Suppose that loanable fund market is in equilibrium and the government grants an investment tax credit only for business investment. How does this policy affect the supply and demand for loanable funds, the equilibrium interest rate and equilibrium quantity of loanable funds? Use graph to explain your answe
Chairman Latrobe, the Supreme Leader of Rolling Rock decided to increase the personal tax rate to fund the defense force. 8) How may this affect the loanable funds market? Explain by describing the change in the demand for, or the supply of, loanable funds. 9) Because of the change decreed by President Thug and your answer to question 8, what is likely to happen to the interest rate and the quantity of funds in the loanable funds market? 10) How will each of these Rolling Rockers feel about President Thug’s decision? (A) Investor Confidence (B) The President of Rolling Rock National Bank
According to how we model the Loanable Funds market in Ch. 6 (considering household savings and taking (T – G) as government’s net ‘saving,’ which could be negative it there were a budget deficit), which of the following shifts the Supply of Loanable Funds curve to the left? (T = taxes; G = government spending.) Group of answer choices A) higher tax rates on business investment spending B) a change in tastes toward consuming less C) higher budget deficit D) change in tastes toward saving more E) lower budget deficit
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, Investment
In the Loanable Funds Market Model, ceteris paribus, which of the following events would best explain an increase in interest rates, together with a decrease in investment? Select one: a. The government went from running a budget surplus to running a budget deficit. b. Private investors anticipate a higher return on their private-sector investments in the future. O c. The government reduced the tax rate on savings income. O d. None of the above is correct.
Financial institutions have warned that increased life expectancy means that many people have not saved enough for their retirement. If true, what will the consumption path of these people look like as they reach their retirement years? Will this consumption path be smooth? And how will an increase in investment demand change the equilibrium interest and quantity of savings? Use a graph for the loanable funds market.
For each of the following pairs, which bond wouldyou expect to pay a higher interest rate? Explain.a. a bond of the U.S. government or a bond of anEastern European governmentb. a bond that repays the principal in year 2020 or abond that repays the principal in year 2040c. a bond from Coca-Cola or a bond from a softwarecompany you run in your garaged. a bond issued by the federal government or abond issued by New York State