ECO100Y5 Study Guide - Midterm Guide: Nominal Interest Rate, Real Interest Rate, Loanable Funds
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ECO100Y5 Full Course Notes
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Chapter 10: saving, investment spending, and the financial system. I = 1000 - 850 100 (100-125) Private saving = gdp c t. The government is experiencing a budget deficit. = private saving + budget balance + net capital. I = private saving + budget balance + net capital inflow a) Bb = - million: 400 = 325 + 10 +nci. Question 6: government reduces deficit to zero. The reduction of deficit decreases loans from q1 to q2. Increases investment (q3 to q2) e t a. If consumers decide to save more, there will be an increase in the supply of loanable funds. In the accompanying figure, this is represented by the rightward shift of the supply curve from s1 to. The increase in the supply of loanable fund reduces the equilibrium interest rate from r1 to r2. In response to the lower interest rate, private investment spending will rise from q1 to q2. e t a.
