Author Question: Suppose the market for dollars is in equilibrium, then the expected future exchange rate rises. What ... (Read 70 times)

809779 · **on:** Jun 29, 2018

Suppose the market for dollars is in equilibrium, then the expected future exchange rate rises. What effect does this change have on the current exchange rate?

A) It will rise.
B) It will fall.
C) It will remain unchanged.
D) Because both the supply and demand curves shift, the effect on the exchange rate is unpredictable.

Question 2

Does a change in the real interest rate shift the supply of loanable funds curve? Explain your answer.

What will be an ideal response?

dantucker · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

A

Answer to Question 2

A change in the real interest rate does not shift the supply of loanable funds curve. Instead, the change in the real interest rate results in a change in the quantity of loanable funds supplied and a movement along the supply of loanable funds curve. The supply of loanable funds curve shifts if some factor that influences the supply of loanable funds other than the real interest rate changes.