Author Question: Black market transactions generally increase the deadweight losses created by restrictive government ... (Read 98 times)

Mr3Hunna · **on:** Jun 29, 2018

Black market transactions generally increase the deadweight losses created by restrictive government policies.

Indicate whether the statement is true or false

Question 2

Explain how each of the following events would affect the supply of loanable funds curve:

a. The economy is in a recession so people's disposable income is lower.
b. The stock market is booming so people's wealth is higher.
c. The future looks a bit more grim, so expected future income is lower.
d. The real interest rate increases.

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

Answer to Question 1

FALSE

Answer to Question 2

a. Disposable income is lower, so saving is decreased. The supply of loanable funds curve shifts leftward.
b. People are wealthier, so they save less. The supply curve of loanable funds shifts leftward.
c. Expected future income is lower, so people save more. The supply of loanable funds curve shifts rightward.
d. The quantity of saving increases. There is an upward movement along the supply of loanable funds curve but no shift in the curve.