ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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The following graph shows the supply of and demand for capital in a market over the last year. You can see that the demand for capital has increased over the last year (the demand curve shifted to the right). Place the black X at the equilibrium interest rate and the quantity of capital. INTEREST RATE, r (Percent) 20 18 16 14 12 2 ↑ D2 $ 0 +₂ 0 D1 2 4 10 12 14 CAPITAL (Billions of dollars) 16 O Weakened O Strengthened 18 20 * Equilibrium The market interest rate increased by 2.0%, and the amount of capital borrowed Does it appear that the economy has strengthened or weakened over the past year? ? by ▼ billion.
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Transcribed Image Text:The following graph shows the supply of and demand for capital in a market over the last year. You can see that the demand for capital has increased over the last year (the demand curve shifted to the right). Place the black X at the equilibrium interest rate and the quantity of capital. INTEREST RATE, r (Percent) 20 18 16 14 12 2 ↑ D2 $ 0 +₂ 0 D1 2 4 10 12 14 CAPITAL (Billions of dollars) 16 O Weakened O Strengthened 18 20 * Equilibrium The market interest rate increased by 2.0%, and the amount of capital borrowed Does it appear that the economy has strengthened or weakened over the past year? ? by ▼ billion.
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Step 1: Define capital market.
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Step 2: Calculate the amount of capital borrowed.
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