Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 26, Problem 4MCQ
To determine
To find:
The option that correctly explains the cause for an increase in the supply of loanable funds.
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Students have asked these similar questions
What is the effect of a fall in the real interest rate on the demand for loanable funds?
A fall in the real interest rate _______.
A.
decreases the demand for loanable funds and shifts the demand curve leftward
B.
decreases the quantity of loanable funds demanded up along the demand curve
C.
increases the demand for loanable funds and shifts the demand curve rightward
D.
increases the quantity of loanable funds demanded down along the demand curve
Thanks!
When does the supply of loanable funds increase?
The supply of loanable funds increases when disposable income _______ or wealth _______.
A.
decreases; increases
B.
decreases; decreases
C.
increases; increases
D.
increases; decreases
Thanks!
The demand for loanable funds has a ________ slope because the lower the interest rate, the ________ number of investment projects are profitable, and the ________ the quantity of loanable funds demanded.
A.
negative; lesser; greater
B.
positive; lesser; lesser
C.
negative; greater; greater
D.
positive; greater; greater
E.
negative; greater; lesser
QUESTION 14
The statement "This Dell laptop costs $1,200" illustrates which function of money?
A.
Liquidity.
B.
Medium of exchange.
C.
Standard of deferred payment.
D.
Store of value.
E.
Unit of account.
Chapter 26 Solutions
Foundations of Economics (8th Edition)
Ch. 26 - Prob. 1SPPACh. 26 - Prob. 2SPPACh. 26 - Prob. 3SPPACh. 26 - Prob. 4SPPACh. 26 - Prob. 5SPPACh. 26 - Prob. 6SPPACh. 26 - Prob. 7SPPACh. 26 - Prob. 8SPPACh. 26 - Prob. 9SPPACh. 26 - Prob. 1IAPA
Ch. 26 - Prob. 2IAPACh. 26 - Prob. 3IAPACh. 26 - Prob. 4IAPACh. 26 - Prob. 5IAPACh. 26 - Prob. 6IAPACh. 26 - Prob. 7IAPACh. 26 - Prob. 8IAPACh. 26 - Prob. 9IAPACh. 26 - Prob. 10IAPACh. 26 - Prob. 1MCQCh. 26 - Prob. 2MCQCh. 26 - Prob. 3MCQCh. 26 - Prob. 4MCQCh. 26 - Prob. 5MCQCh. 26 - Prob. 6MCQCh. 26 - Prob. 7MCQCh. 26 - Prob. 8MCQ
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- Why, other things remaining the same, does a rise in the real interest rate decrease the quantity of loanable funds demanded? The quantity of loanable funds demanded decreases because at a higher interest rate _______. A. fewer projects have an expected rate of profit below the real interest rate B. more projects have an expected rate of profit that exceeds the real interest rate C. banks want to lend more D. fewer projects have an expected rate of profit that exceeds the real interest ratearrow_forwardHow does an increase in disposable income change the equilibrium in the loanable funds market? An increase in disposable income _______ the equilibrium real interest rate and _______ the equilibrium quantity of loanable funds. A. raises; increases B. lowers; increases C. raises; decreases D. lowers; decreasesarrow_forwardRecently, 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.arrow_forward
- 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. Clear my choicearrow_forwarda. Consider the Market for Loanable Funds in a closed economy. What would be the impacts of the following events on interest rates and investment. i. The government introduces a tax credit for savings accounts of up to $10,000 per year. ii. The government introduces a tax credit for savings accounts of up to $10,000 per year, and at the same time it repeals an investment tax exemption provision. iii. The government raises the tax rates. iv. The government issues bonds worth $10 billion. b. In a closed economy GDP = $1,400, private saving = $225, government budget deficit = $15, and government spending $25 (all numbers are in billions). Calculate national saving, taxes, and consumption. %3Darrow_forward12. Suppose the interest rate decreases. Other things constant, how will the loanable funds market be affected? a. The demand for loanable funds curve will shift to the right. b. The demand for loanable funds curve will shift to the left. c. The quantity of loanable funds demanded will increase. d. The quantity of loanable funds supplied will increase. 13. Suppose a research lab fired a chemist, and then an environmental protection group hired the chemist at the same salary. What would be the net effect of these events on aggregate demand? a. The aggregate demand would shift rightward. b. The aggregate demand would shift leftward. c. The aggregate demand would become steeper. d. The aggregate demand would remain the same.arrow_forward
- Over time how do changes in the demand for loanable funds and the supply of loanable funds change the real interest rate? Over time,_______. A. the demand for loanable funds trends downward, the supply of loanable funds trends upward, and the real interest rate trends upward. B. both the demand for loanable funds and the supply of loanable funds trend upward, and the real interest rate also trends upward. C. the demand for loanable funds trends upward, the supply of loanable funds trends downward, and the real interest rate trends upward. D. both the demand for loanable funds and the supply of loanable funds trend upward, but the real interest rate has no trend.arrow_forward1. Using the market for loanable fund diagram, show graphically and explain how the interest rate and investment are affected in each of the following cases. (Draw a separate diagram for each.)i. Tax on interest income decreases.ii. Government is running a budget surplus.iii. Investment tax credit falls.arrow_forwardQu Listen In which situation do you NOT contribute to the supply of loanable funds? a) You charge a vacation on a credit card. b) You pay off your mortgage. c) You open a new savings account. d) You make the final payment on your private student loan.arrow_forward
- Suppose government budget requires the government to sell $30 billion bonds to the public. A. Use supply-demand diagram to analyze the impact on interest rate and investment. Explain the effect in words. B. Answer (a) assuming that the supply of loanable funds in perfectly inelastic.arrow_forward#18. What would happen in the market for loanable funds if the government were to increase the tax on interest income? a The supply of loanable funds would shift right. b The demand for loanable funds would shift right. c The supply of loanable funds would shift left. d The demand for loanable funds would shift left.arrow_forwardUse the analysis for the market for loanable funds diagram to illustrate and explain how the following government policy affects the economy’s saving and investment. Policy 1: Suppose the government starts with a balanced budget and then, because of a tax cut or spending increase, starts running a budget deficit.State, explain and draw the loanable funds diagram for i,ii and iii. (i) which which loanable funds curve would this policy affect?(ii) which way would the loanable funds curve shift?(iii) what would be the the impact on interest rates?arrow_forward
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