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Economics
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13 Dec 2019

Suppose a country has a larger increase in debt in 2014 than it had in 2013. Then other things the same,
a. the supply of loanable funds shifts rightward and the interest rate falls.
b. the supply of loanable funds shifts leftward and the interest rate rises.
c. the demand for loanable funds shifts leftward and the interest rate falls.
d. the demand for loanable funds shifts rightward and the interest rate rises.

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17 Dec 2019
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Related questions

1. You will use this information for the next two questions. Where the supply of loanable funds curve crosses the demand for loanable funds curve, the interest rate is 4% and the quantity of loanable funds is $200 million. At the current interest rate, the quantity supplied of loanable funds is $50 million and the quantity demanded is $350 million. Which of the following scenarios might be true in this case?

A. The interest rate is 2.5% and there is a surplus of loanable funds.

B. The interest rate is 6.5% and there is a shortage of loanable funds.

C. The interest rate is 2.5% and there is a shortage of loanable funds.

D. The interest rate is 6.5% and there is a surplus of loanable funds

2. Using the information from the previous question, calculate the amount, in dollars, of the shortage or surplus of loanable funds.

The country is currently experiencing 7 consecutive months of gradually increasing inflation. Experts predict at least another 6 months of the same. Which of the following is likely to occur?

A) Bond demand decreases and loanable funds supply increases

B) Bond demand decreases and loanable funds supply decreases

C) Bond demand increases and loanable funds supply decreases

D) Bond prices increase and interest rates decrease

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