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ECON-200 Lecture Notes - Lecture 17: Non-Bank Financial Institution, Loanable Funds, Debit Card

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School
Diablo Valley College
Department
Economics
Course
ECON-200
Professor
Sorce

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Document Summary

The supply of loanable funds curve shifts to the right. The quantity demanded for loanable funds increases. Shifts the demand curve to the right. Results in a higher interest rate and a greater quantity saved. Currency is the plastic notes and metal coins in the hands of the public. Current deposits are balances in bank accounts that depositors can access on demand by using a debit card or writing a cheque. M1 currency plus deposits in banks. M3- m1 plus all deposits of the private non-bank sector. Broad money- everything in m3, deposits in non-bank financial institutions and bank deposits by non-bank financial institutions. Number of time each # is used to buy goods and services. The money supply is the quantity of money available in the economy. Creation of supply money by the central bank and the banking system: the rba (monopolistically)

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Related Questions

If there is a shortage of loanable funds, then

a. the supply for loanable funds shifts right and the demand shifts left.

b. the supply for loanable funds shifts left and the demand shifts right.

c. neither curve shifts, but the quantity of loanable funds supplied increases and the quantity demanded decreases as the interest rate rises to equilibrium.

d. neither curve shifts, but the quantity of loanable funds supplied decreases and the quantity demanded increases as the interest rate falls to equilibrium.

The following graph shows the market for loanable funds in a closed economy. The upward-sloping line shows the supply of loanable funds and the downward sloping line shows the demand for loanable funds.

(Saving/Investment) is the source of the demand for loanable funds. As the interest rate falls, the quantity of loanable funds demanded (decreases/increases) .

Suppose the interest rate is 4.5%. Based on the previous graph, the quantity of loanable funds supplied is (Greater/Less) than the quantity of loans demanded, resulting in a (Surplus/Shortage) of loanable funds. This would encourage lenders to (Raise/Lower) the interest rates they charge, thereby (Increasing/Decreasing) the quantity of loanable funds supplied and (Increase/Decrease) the quantity of loanable funds demanded, moving the market toward the equilibrium interest rate of ______%.

 

as the interest rate falls, the quantity of loanable funds demanded

Supply and demand for loanable funds

The following graph shows the market for loanable funds in a closed economy. The upward-sloping orange line represents the supply of loanable funds, and the downward sloping blue line represents the demand for loanable funds.

(Saving/Investment) is the source of the demand for loanable funds. As the interest rate falls, the quantity of loanable funds demanded (decreases/increases) .

Suppose the interest rate is 4.5%. Based on the previous graph, the quantity of loanable funds supplied is (Greater/Less) than the quantity of loans demanded, resulting in a (Surplus/Shortage) of loanable funds. This would encourage lenders to (Raise/Lower) the interest rates they charge, thereby (Increasing/Decreasing) the quantity of loanable funds supplied and (Increase/Decrease) the quantity of loanable funds demanded, moving the market toward the equilibrium interest rate of ______%.