Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 24, Problem 23APA
To determine
Graphically illustrate the effect of country T’s action on the loanable funds market.
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Students have asked these similar questions
Given demand and supply for loanable fund Market at given time period in the
table below
Quantity of loanable fund
demanded (billion $)
Real
Quantity of loanable
fund supplied (billion $)
interest rate
0.5
400
120
0.75
380
140
1
360
160
180
1.25
340
1.5
320
20
1.75
300
220
280
240
2.25
260
260
2.5
240
280
2.75
220
300
3
200
320
3.25
180
340
3.5
160
360
3.75
140
380
4
120
400
Instructions:
1. Using excel, find the equilibrium real interest rate and quantity of loanable
fund, show the point on the graph.
2. If this country experiences an expansion business cycle phase that increases
the demand for loanab
fund by $40 billion.
a) Find the new equilibrium real interest rate and quantity of loanable
fund.
b) Show the shift on the graph.
3. Starting from the original equilibrium If there is a decreases in aggregate
income that decreases supply for loanable fund by $20 billion.
a) Find the new equilibrium real interest rate and quantity of loanable
fund.
b) Show the shift on the graph. (
1. Draw a graph when government run a change in the
tax that might increase private saving. How would
it affect the market for loanable funds?
The table below shows Demand and Supply for loanable fund at given time.
Real interest rate
Quantity of loanable fund demanded (billion $)
Quantity of loanable fund supplied (billion $)
0.01
1000
400
0.02
950
450
0.03
900
500
0.04
850
550
0.05
800
600
0.06
750
650
0.07
700
700
0.08
650
750
0.09
600
800
0.10
550
850
0.11
500
900
0.12
450
950
0.13
400
1000
0.14
350
1050
0.15
300
1100
Instructions:
Using excel, find the equilibrium real interest rate and quantity of loanable fund.
show the equilibrium on a graph.
If this country experiences a recession business cycle phase that decreases the demand for loanable fund by $200 billion.
Find the new equilibrium real interest rate and quantity of loanable fund.
Show the shift on the graph.
list Two factors that shift SLF rightward and two factors that shift DLF rightward
What is the meaning of crowding out?…
Chapter 24 Solutions
Macroeconomics
Ch. 24.1 - Prob. 1RQCh. 24.1 - Prob. 2RQCh. 24.1 - Prob. 3RQCh. 24.1 - Prob. 4RQCh. 24.2 - Prob. 1RQCh. 24.2 - Prob. 2RQCh. 24.2 - Prob. 3RQCh. 24.2 - Prob. 4RQCh. 24.2 - Prob. 5RQCh. 24.3 - Prob. 1RQ
Ch. 24.3 - Prob. 2RQCh. 24.3 - Prob. 3RQCh. 24.3 - Prob. 4RQCh. 24.3 - Prob. 5RQCh. 24.3 - Prob. 6RQCh. 24.4 - Prob. 1RQCh. 24.4 - Prob. 2RQCh. 24.4 - Prob. 3RQCh. 24 - Prob. 1SPACh. 24 - Prob. 2SPACh. 24 - Prob. 3SPACh. 24 - Prob. 4SPACh. 24 - Prob. 5SPACh. 24 - Prob. 6SPACh. 24 - Prob. 7SPACh. 24 - Prob. 8SPACh. 24 - Prob. 9SPACh. 24 - Prob. 10SPACh. 24 - Prob. 11SPACh. 24 - Prob. 12SPACh. 24 - Prob. 13APACh. 24 - Prob. 14APACh. 24 - Prob. 15APACh. 24 - Prob. 16APACh. 24 - Prob. 17APACh. 24 - Prob. 18APACh. 24 - Prob. 19APACh. 24 - Prob. 20APACh. 24 - Prob. 21APACh. 24 - Prob. 22APACh. 24 - Prob. 23APACh. 24 - Prob. 24APACh. 24 - Prob. 25APACh. 24 - Prob. 26APACh. 24 - Prob. 27APACh. 24 - Prob. 28APACh. 24 - Prob. 29APACh. 24 - Prob. 30APA
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Similar questions
- How is buying a house to live in a type of financial investment?arrow_forward17. What makes up the supply curve in the loanable funds market? Why does this curve have a positive relationship with the real interest rate?arrow_forward1. What happens to the quantity of loanable funds supplied when the interest rate rises? Explain why this change happensarrow_forward
- Scenario 1: The economy enters a recession driving down the demand for homes nationwide. 1. What is the expected impact on the demand for loanable funds? 2. What effect will this change have on the interest rate? 3. How will this change the behavior of consumers?arrow_forwardShow the effect on the real interest rate and equilibrium quantity of loanable funds of an increase in the demand for loanable funds and a smaller increase in the supply of loanable funds. Draw a demand for loanable funds curve. Label it DLF. Draw a supply of loanable funds curve. Label it SLF. Draw a point at the equilibrium real interest rate and quantity of loanable funds. Label it 1. Real interest rate (percent per year) 12.0 Draw a curve that shows an increase in the demand for loanable funds. Label it DLF,. 10.0- Draw a curve that shows a smaller increase in the supply of loanable funds. Label it SLF,. Draw a point at the new equilibrium real interest rate and quantity of loanable funds. Label it 2. 8.0- 6.0- 4.0- 2.0- 0.0+ 0.0 1.0 2.0 3.0 Loanable funds (trillions of 2012 dollars) 4.0 5.0 >>> Draw only the objects specified in the question. Click the graph, choose a tool in the palette and follow the instructions to create your graph. MacBook Air DD DII F11 F10 F9 000 000 F8 F7…arrow_forwardDraw and fully label a diagram to illustrate the market for loanable fund to analyze this policy. How does the elasticity of the supply of loanable funds affect the size of these changes? How does the elasticity of the demand of loanable funds affect the size of these changes?arrow_forward
- Scenario 3: Unemployment decreases throughout the country causing a dramatic increase in income for millions of Americans. Causing Americans to save more. 1. What is the likely effect of this increase in income on the supply of loanable funds? 2. What effect will this change have on the interest rate?arrow_forwardWhat is the effect of continuous increase in savings on loanable funds market?arrow_forward8 Demand, Supply 7 10 4 REAL INTEREST RATE (Percent) 3 2 - 10 20 30 40 50 60 70 80 QUANTITY OF LOANABLE FUNDS (Billions of dollars) Refer to Figure 33-1. If the real interest rate is 3 percent, the quantity of loanable funds demanded is $50 billion, and the quantity supplied is $30 billion. $20 billion, and the quantity supplied is $60 billion. $50 billion, and the quantity supplied is $60 billion. $30 billion, and the quantity supplied is $50 billion.arrow_forward
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