ECO 1102 Study Guide - Midterm Guide: Loanable Funds, Demand Curve, Equilibrium Point

• School: University of Ottawa
• Department: Economics
• Course: ECO 1102
• Professor: David Gray

Document Summary

It covers chapters 7-10: (7 points) a) on the axes that are provided below, depict the loanable funds market in equilibrium. Label all axes and curves: on the same figure, show what happens in this market if tax incentives for. Indicate which curves, if any, shift, and explain how the loanable funds market adjusts. For the graph, see figure 8. 3 in the textbook. There is an increase in the willingness to invest, and so there is an increase in the demand for loanable funds for the purposes of borrowing. At each possible rate of interest, the quantity demanded of loanable funds rises. The cases that they mention are the implementation of a minimum wage, the implementation of a union wage, and an efficiency wage. Instead, depict the situation of the existence of a wage above the equilibrium level graphically on the same figure, as it appears in figure 9. 5 in the textbook.