First Call, Inc. is a wireless service provider.
It plans to build an assembly plant that costs $14 million if the
real interest rate is 3 percent a year.
If the real interest rate is 2 percent a year, First Call will
build a larger plant that costs $16 million.
And if the real interest rate is4 percent a year, First Call will
build a smaller plant that costs $12 million.
Draw points to show the quantity of loanable funds demanded when
the real interest rate is
1)4 percent a year. Label the point 1.
2)3 percent a year. Label the point 2.
3) 2 percent a year. Label the point 3.
Draw First Call's demand for loanable funds curve through the
points. Label it.
11
12
13
14
15
16
17
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Loanable funds (millions of 2009 dollars)
Real interest rate (percent per year)
MAKE THIS INTO A GRAPH please
The demand for lonable fund curve is shown with the blue line and labeled as 1, 2, 3 as follows
I hope the rest of the data points you have given is for supply of loanable fund as follows. If not, you may ignore the orange line from the above chart. If yes, the equilibrium interest rate = 3% and equilibrium loanable fund = $14 million.
Supply | Rate of Interest |
11 | 1.5 |
12 | 2 |
13 | 2.5 |
14 | 3 |
15 | 3.5 |
16 | 4 |
17 | 4.5 |
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