19. A bank provides: a. liquidity; that is, access to cash when and where you wa

Question

19. A bank provides: a. liquidity; that is, access to cash when and where you want it b. liquidity; that is, it connects buyers to sellers to ease saving and borrowing e risk diversification; that is, access to cash when and where you want it d. risk diversification; that is, connecting buyers and sellers to ease saving and 20. The market for loanable funds is a market in which a savers supply funds to those who want to borno for their investment spending needs. b borrowers buy and sell loans. c. savers interact to set the interest rate for loans d borrowers supply funds to savers, who want loans for their investment spending needs. S1 $2 rl r2 r3 D2 D1 21 01 02 Considering the market for loanable funds as depicted in the given graph, a change that increased the quantity people want to save at any given interest rate would cause a new equilibrium at: a. a lower interest rate and a higher equilibrium quantity of fands saved and invested b. a higher interest rate and a higher equilibrium quantity of funds saved and invested. e. a lower interest rate and a lower equilibrium quantity of funds saved and invested d. a higher interest rate and a lower equilibrium quantity of funds saved and invested. 22. A booming economy can make investors: a eager to borrow money, and shift the demand curve for loanable funds to the right b eager to borrow money, and shift the supply curve for loanable funds to the right. c wary of future downturns, and shift the demand curve for loanable funds to the left. d wary of future downturns, and shift the supply curve for loanable funds to the left

Explanation / Answer

19) option B - A bank provides liquidity; that is, it connects buyers to sellers to ease saving and borrowing.

20) option A - savers supply funds to those who want to borrow for their investment spending needs.

21) option A is correct - a lower interest rate and a higher equilibrium quantity of funds saved and invested. (supply curve shifts to the right)

22) option A is correct - eager to borrow money, and shift the demand curve for loanable funds to the right.

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