ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question
Please use the graph to answer the given questions. Assume the people act rationally.
Which of the statements best describes a situation represented by point A? Look at the image to solve for this
Jeff agrees to lend money to his brother, who plans to use the funds to open a shoe store.
Wayne projects that if he takes out a loan to open another gym franchise, he will earn a lower return than the interest rate he would have to pay, so he decides against it.
Janine predicts that, if she borrows to expand operations, she will earn a rate of profit higher than the interest rate of the loan. So, she decides to take out the loan.
Carly decides against purchasing a corporate bond because she has another investment opportunity that returns 17%.
Given the market conditions, what will be the prevailing interest rate?
18%
2%
17%
10%
6%
Given the market conditions, how much will be available in loanable funds?
$90 billion
$50 billion
$30 billion
$70 billion
$10 billion
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