Question

If the demand for loanable funds increases, what will happen to real interest rates and the...

If the demand for loanable funds increases, what will happen to real interest rates and the economic growth?

Real Interest Rates / Economic Growth

a. Increase / Increase

b. Increase / Decrease

c. Decrease / No Change

d. Decrease / Decrease

e. Decrease / Increase

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer :- Option 'b' is the correct Answer

If the demand for loanable funds increases, then real interest rates will increase and the economic growth will decrease.

Increase in loanable funds cause an increase in Intrest, the investment will go down and hence economic growth will decrease.

One of the reasons the demand curve for the loanable funds graph is down-sloping is that when the interest rate is low, the quantity demanded of loanable funds will be greater.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
All else equal, increased government budget deficits _____. A. increase the demand for loanable funds, reducing...
All else equal, increased government budget deficits _____. A. increase the demand for loanable funds, reducing interest rates B. increase the supply of loanable funds, reducing interest rates C. increase the demand for loanable funds, increasing interest rates D. decrease the supply of loanable funds, reducing interest rates E. decrease the demand for loanable funds, reducing interest rates
If the demand for loanable funds shifts left, then A. The real interest rate and the...
If the demand for loanable funds shifts left, then A. The real interest rate and the equilibrium quantity of loanable funds both fall B. The real interest rate falls and the equilibrium quantity of loanable funds rises C. The real interest rate and the equilibrium quantity of loanable funds both rise D. The real interest rate rises and the equilibrium quantity of loanable funds falls
1. Which statement about interest rates is false?    a.   The supply of loanable funds is...
1. Which statement about interest rates is false?    a.   The supply of loanable funds is independent of the rate of interest    b.   The equilibrium interest rate is determined by the intersection of the supply and demand schedules for loanable funds    c.   Interest rates are affected by households' spending decisions    d.   Interest rates typically reflect the risk involved in extending a loan 2. There will be pressure on the interest rate for loanable funds to increase when:...
Using the loanable funds theory, explain what will happen to the real interest rate in an...
Using the loanable funds theory, explain what will happen to the real interest rate in an economy if a new technology is developed whereby businesses will be demanding more loanable funds.
Suppose that the real interest rates fell and quantity for loanable funds fell. According to the...
Suppose that the real interest rates fell and quantity for loanable funds fell. According to the market for loanable funds, which of the following could explain both of these changes? Group of answer choices The demand for loanable funds shifted right. The demand for loanable funds shifted left. The supply of loanable funds shifted right. The supply of loanable funds shifted left.
Consider the loanable funds market. What event would cause a) real interest rate to increase b)...
Consider the loanable funds market. What event would cause a) real interest rate to increase b) real interest rate to decrease c) quantity of investment to increase d) quantity of investment to decrease
Using the loanable funds framework, speculate what would happen to equilibrium real interest rates, national savings,...
Using the loanable funds framework, speculate what would happen to equilibrium real interest rates, national savings, investment, and consumption if: a. Households expect a dramatic increase in productivity in the future (even though current productivity is unchanged) that will boost future incomes and the future marginal products of capital. b. Uncertainty about future taxes and regulations results in cutting back on firms’ plans to build new production facilities c. Government spending (financed with taxes so that the budget remains balanced)...
1. There is an increase in bond demand. Holding other factors constant the, a. bond prices...
1. There is an increase in bond demand. Holding other factors constant the, a. bond prices will increase b. interest rates will increase c. loanable funds supply decreases d. loanable funds demanded decreases 2. There is a decrease in bond demand. Holding other factors constant, then a. bond prices decrease b. interest rates decrease c. loanable funds supply increases d. loanable funds demanded decreases 3. The country is currently experiencing 7 consecutive months of gradually increasing inflation. Experts predict at...
A decrease in the cost of borrowing (interest rate) will case a) the demand for loanable...
A decrease in the cost of borrowing (interest rate) will case a) the demand for loanable funds to increase. b) the supply of loanable funds to decrease. c) both A and B. d) either A or B, but not both. e) none of the above. The answer is e, but why? Doesn't a decrease in the interest rate will cause people to save less, but it causes firms to invest more? Why is the answer not c?
In terms of the loanable funds market, what happen to consumption, the interest rate, and investment...
In terms of the loanable funds market, what happen to consumption, the interest rate, and investment when the government increases taxes?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT