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. The table shows an economy's demand for loanable funds and...
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The table shows an economy's demand for loanable funds and supply of loanable funds schedules when the government's budget is balanced. . Real Loanable funds Loanable funds
The quantity of loanable funds demanded increases by $1.5 trillion at each real interest rate and the quantity of loanable infiezejetnr'ate demanded supplied
funds supplied increases by $0.5 trillion at each interest rate, pper year) (trillions of 2012 dollars per year)
If, at the same time the government budget becomes a deficit of $2.0 trillion, what are the real interest rate, the quantity of 4 8.0 6.0
loanable funds, investment. and saving? 5 75 6.5
>>> Answer to '1 decimal place. 6 7.0 7_0 7 6.5 7.5 < ' 8 6.0 8.0 9 5.5 8.5 The real interest rate is percent a year. 10 5.0 9.0 The quantity of loanable funds is $ trillion, investment is $ trillion, and saving is $ trillion. There crowding out in this situation because l: '3 A. is; the deficit increases the real interest rate, which decreases investment , B. is no; investment is $7.0 trillion
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With an increase in political tension, many governments increased defense spending. which decreased government budget
surpluses. Show, on a graph, the effects of a decrease in government budget surpluses if there is no Ricardo-Barre effect. Explain how the effects differ if there is a partial Ricardo-Barre effect. The graph shows the demand for loanable funds curve, DLF, and the private supply of loanable funds curve. PSLF.
Draw the total supply of loanable funds curve when the government has a budget surplus. Label it SLFO. Draw a point at the equilibrium real interest rate and equilibrium quantity of loanable funds. Label it 1. Now governments increase defense spending. which decreases the government budget surplus. Draw the new total supply of loanable funds curve when the government budget surplus decreases but the government
budget remains a surplus. Label it SLF1. Assume there is no Ricardo-Barre effect. Draw a point at the equilibrium real interest rate and equilibrium quantity of loanable funds. Label it 2. If there is a partial Ricardo-Barre effect, then when the government budget surplus decreases, the total supply of loanable
funds curve in the graph you have drawn would lie {:7 A. to the left of SLF1 v1"! B. between SLFO and SLF1 i: ) C. to the right of SLF0 10.0 9.0 8.0 70 60 50 40 3.0 2.0 1.0 0.0 Real interest rate (percent per year) PLF DF 0 2 4 6 8 10 12 14 16 18 20
Loanable funds (trillions of 2012 dollars) >>> Draw only the objects speleied in the question. 99
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