Answered: Which factor brings the supply and…

Which factor brings the supply and demand of loanable funds into balance? net capital outflows the real interest rate the futures market for commodities collective bargaining domestic investment

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(a) U.S. (b) U.K. Interest rate Interest rate Supply 6% EA 4 Demand Quantity of loanable funds 4% 2 EB Supply Demand Quantity of loanable funds Given the loanable funds market graphs above, explain what will happen in the: 。 UK-| US
Why is well-functioning financial system is a critical ingredient in achieving long-run growth? It ensures that savings are channeled towards productive investment projects efficiently. It ensures that savings are avaialble during economic downturns. It allows funds for economic recoveries. It facilitates international trade.
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Over the past decade, some of Japanese saving has been used to finance US investment. That is, the Japanese have been buying US capital assets. Use panel of three graphs to answer the following questions : a. If the Japanese decided they no longer wanted to buy US assets, what would happen in the US market for loanable funds? In particular, what would happen to US interest rates, US saving and US investment? And what happen to NCO ? b. What would happen in the market for foreign currency exchange? In particular, what would happen to the value of the dollar (exchange rate) and the US trade balance? Explain
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Recently, the economies of North Korea and Norway have begun to grow very rapidly. This increases their citizens’ income and wealth as well. In turn, these citizens increase their savings not only in their country, but also in the United States. In this case, which of the following statements is correct? A. The supply of loanable funds decreases as savings increase. B. The supply of loanable funds increases as savings increase. C. The demand of loanable funds decreases as savings increase. D. Both supply and demand of loanable funds increase as savings increase.
Question 23 Suppose the world consists of two countries, ABC and XYZ, only. The (autarky) equilibrium interest rate in ABC and XYZ are 15% and 12% respectively. The market for loanable funds can be described by the following equations: Demand for loanable funds DFABC = 300 – 7İABC DFXYZ = 180 – 6ixyZ Supply of loanable funds SFB = 30 + 3İABC Country АВС XYZ SFc = 60 + 14ixYZ %3D Note: Interest rates are expressed in percentage points (i.e., if i = 5, then i = 5%). (inflows or When the international flows of capital are allowed, XYZ will experience net capital (enter a number here and keep your answer to the outflows) and the size of XYZ's trade balance is nearest integer)
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Economists who favour balanced budgets argue that increases in government spending, without any corresponding increase in taxes, will have a certain effect in the market for loanable funds. Modify the graph to show this effect. Real interest rate demand X Quantity of loanable funds As a result, this impact on the market for loanable funds reduces imports. labour productivity. capital inflows. domestic investment.
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