Which of the following statements about the loanable funds market is correct? a)
ID: 1157551 • Letter: W
Question
Which of the following statements about the loanable funds market is correct?
a) The actions of investors affect the supply curve in the market.
b) The actions of investors affect the demand curve in the market.
c) The actions of savers affect the demand curve in the market.
d) The actions of investors affect both the demand curve and the supply curve in the market.
What happens to the amount of funds supplied to the loanable funds market when the interest rate decreases?
a) The amount of loanable funds supplied decreases.
b) The amount of loanable funds supplied increases.
c) The amount of loanable funds supplied stays the same.
d) The amount of loanable funds supplied falls to zero when the interest rate decreases.
When the interest rate decreases, the amount of loanable funds demanded in the market:
a) decreases; this causes a movement up and to the left along the demand curve.
b) increases; this causes a movement down and to the right along the demand curve.
c) decreases; the entire demand curve shifts left.
d) increases; the entire demand curve shifts right.
which of the following scenarios would be most likely to cause the shift in the demand of loanable funds from D0 to D1, shown in the following diagram?
a) A decrease in investment tax credits.
b) A technological advancement that increases productivity.
c) A decrease in business taxes.
d) The lifting of business regulations.
So Do Loanable Funds (billions of dollars)Explanation / Answer
Q1. Option d As the demand and supply or loanable funds is determined by actions of investors
Q2. Option a. With the decrease in interest rate savers would supply less of it
Q3. Option d. Interest and demand for loanable funds are directly related
Q4. Option a. As the tax credits are decreased the demand for new funds reduces which shifts the demand curve to left
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