Questions
Single choice
A decrease in household savings due to higher consumer spending will generally cause a ___________ the ___________for loanable funds.[Fill in the blank]
Options
A.a. Rightward shift of; demand curve
B.b. Leftward shift of; demand curve
C.c. Rightward shift of, supply curve
D.d. Leftward shift of, supply curve
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Step-by-Step Analysis
Consider what happens when households save less because they spend more. This directly affects the supply of loanable funds, which comes from savings by households.
Option a: Rightward shift of the demand curve. This would imply that higher spending increases the demand fo......Login to view full explanationLog in for full answers
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Similar Questions
Consider the Loanable Funds Model: Which of the following is consistent with the graph depicted below?
The graph above shows hypothetical supply and demand functions for loanable funds. Suppose that FDIC increases the amounts of insured bank deposits and as a result the credit risk decreases for depositors (households and firms that deposit money in commercial banks). This causes one of the functions to shift by $40 million. As a result, the new equilibrium real interest rate equals X percent. What is X? Note: Ex-ante real interest rate is the same thing as real interest rate.
The supply of loanable funds curve is _____ sloping because _____ respond to lower interest rates by _____ their quantity supplied of loanable funds.
Question2 According to the loanable funds approach, an increase in inflation expectations will have the following immediate effect: Shift both the demand and supply curves to the right Only the supply curve shifts to the left, while the demand curve remains unchanged. Shift both the demand and supply curves to the left Shift the demand curve to the right and the supply curve to the left Only the demand curve shifts to the right, while the supply curve remains unchanged. Shift the demand curve to the left and the supply curve to the right ResetMaximum marks: 0.59 Flag question undefined
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