Solutions? 14) Changes in all of the following shift the supply curve of loanabl

Question

Solutions? 14) Changes in all of the following shift the supply curve of loanable funds EXCEPT A) the real interest rate. B) wealth. C) disposable income. D) expected future income. 15) In the loanable funds market, as the interest rate rises the and the Aquantity of loanable funds supplied increases; quantity of loanable funds demanded decreasos B) quantity of loanable funds supplied decreases; quantity of loanable C) supply of loanable funds increases; demand for loanable funds decreases D) supply of loanable funds decreases; demand for loanable funds increases funds demanded increases DLF DLFo DLF2 1.5 0.5 1.0 2.0 Loanable funds trillions of 2005 dollars) 16) In the above figure, a decrease in the real interest rate will result in a movement from point E to A) point F B) point G C) point H D) point I in will shift the supply of loan able funds curve 17) An increase A) expected future income, rightward B) wealth; leftward C) disposable income; leftward D) default risk; rightward 18) Suppose the market for loanable funds is in equilibrium. If the expected profit falls, the and the quantity of loanable funds equilibrium real interest rate A) falls; decreases

Explanation / Answer

14) Correct answer is:A

As real interest rates change supply will not shift it will move along the same line(If interest rates increase, supply will increase and if real interest rates decrease then supply will decrease along the same line) as shown in the given figure in Question number 15.(Movement from E to I and E to G hence every other factor will shift the supply except real interest rates which only causes movement along the same line.

15) Correct answer is : C

Explanation: As interest rates rise more banks will supply loans to earn profit but less customers will borrow as they will think interest rates to be higher.

16) Correct answer is : B

When interest rates go down more customers will borrow resulting into higher demand.

17) Correct answer is : A

When future incoe is expected to rise then banks will be more optimisic about recovery and hence supply of loan will shift to righ side.

18) All options are not shown in image.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.