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Without influence from foreign sources of funds, the long-term equilibrium interest rate is term equilibrium interest rate is %. %. With influence from foreign funds, the long-

Without influence from foreign sources of funds, the long-term equilibrium interest rate is term equilibrium interest rate is %. %. With influence from foreign funds, the long-

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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The impact of international capital flows

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8. The impact of international capital flows Suppose that the following graph depicts the market for funds in the US credit market. The blue line, labeled D, represents the demand for funds. The supply curve labeled s₁ represents the supply curve of funds from American sources, with no foreign funds in the market. The supply curve labeled $2 represents the supply curve of funds from both American and foreign sources. Long-Term Interest Rate 10 9 D Amount of Funds $₁ $₂ (?
Transcribed Image Text:8. The impact of international capital flows Suppose that the following graph depicts the market for funds in the US credit market. The blue line, labeled D, represents the demand for funds. The supply curve labeled s₁ represents the supply curve of funds from American sources, with no foreign funds in the market. The supply curve labeled $2 represents the supply curve of funds from both American and foreign sources. Long-Term Interest Rate 10 9 D Amount of Funds $₁ $₂ (?
Without influence from foreign sources of funds, the long-term equilibrium interest rate is term equilibrium interest rate is %. The following graph depicts the market for business investments in the United States. The green line represents the relationship between the long- term interest rate and the amount of business investments. Use the black point (plus symbol) to plot the point that represents the combination of business investment and long-term interest rate that comes about when there is no influence from foreign funds. Then, use the grey point (star symbol) to plot the point that represents the combination of business investment and long-term interest rate when the influence from foreign funds is accounted for. (?) Long-Term Interest Rate 10 9 8 5 3 2 1 0 # 0 50 100 150 200 250 300 350 400 450 US Business Investment (Billions) 500 %. With influence from foreign funds, the long- + Without foreign funds With foreign funds
Transcribed Image Text:Without influence from foreign sources of funds, the long-term equilibrium interest rate is term equilibrium interest rate is %. The following graph depicts the market for business investments in the United States. The green line represents the relationship between the long- term interest rate and the amount of business investments. Use the black point (plus symbol) to plot the point that represents the combination of business investment and long-term interest rate that comes about when there is no influence from foreign funds. Then, use the grey point (star symbol) to plot the point that represents the combination of business investment and long-term interest rate when the influence from foreign funds is accounted for. (?) Long-Term Interest Rate 10 9 8 5 3 2 1 0 # 0 50 100 150 200 250 300 350 400 450 US Business Investment (Billions) 500 %. With influence from foreign funds, the long- + Without foreign funds With foreign funds
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