This topic contains a solution. Click here to go to the answer

Author Question: If a surplus of loanable funds exists in the loanable funds market, the real interest rate ________ ... (Read 240 times)

Arii_bell

  • Hero Member
  • *****
  • Posts: 596
If a surplus of loanable funds exists in the loanable funds market, the real interest rate ________ and the quantity of saving ________.
 
  A) falls; increases
  B) rises; decreases
  C) falls; does not change
  D) rises; increases
  E) falls; decreases

Question 2

The slope of the AE curve is .80. What is the expenditure multiplier? Everything else the same, by how much does equilibrium aggregate expenditure increase if
 
  a. exports increase from 1.75 trillion to 2.25 trillion?
  b. government expenditure on goods and services decrease from 2.0 trillion to 1.8 trillion?
  c. investment increases from 1.2 trillion to 2.3 trillion?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

heinisk01

  • Sr. Member
  • ****
  • Posts: 329
Answer to Question 1

E

Answer to Question 2

The multiplier is 5.
a. The change in equilibrium aggregate expenditure equals the multiplier times the change in autonomous expenditure, which is 0.5 trillion. So the change in equilibrium expenditure is .
b. The change in equilibrium aggregate expenditure equals the multiplier times the change in autonomous expenditure, which is -0.2 trillion, that is, government expenditures decrease by . So the change in equilibrium expenditure is 5  (-0.2 trillion) = -1.0 billion.
c. The change in equilibrium aggregate expenditure equals the multiplier times the change in autonomous expenditure, which is 1.1 trillion. So the change in equilibrium expenditure is .




Arii_bell

  • Member
  • Posts: 596
Reply 2 on: Jun 29, 2018
Excellent


nothere

  • Member
  • Posts: 324
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

Did you know?

Once thought to have neurofibromatosis, Joseph Merrick (also known as "the elephant man") is now, in retrospect, thought by clinical experts to have had Proteus syndrome. This endocrine disease causes continued and abnormal growth of the bones, muscles, skin, and so on and can become completely debilitating with severe deformities occurring anywhere on the body.

Did you know?

Many medications that are used to treat infertility are injected subcutaneously. This is easy to do using the anterior abdomen as the site of injection but avoiding the area directly around the belly button.

Did you know?

Thyroid conditions may make getting pregnant impossible.

Did you know?

Signs of depression include feeling sad most of the time for 2 weeks or longer; loss of interest in things normally enjoyed; lack of energy; sleep and appetite disturbances; weight changes; feelings of hopelessness, helplessness, or worthlessness; an inability to make decisions; and thoughts of death and suicide.

Did you know?

Every 10 seconds, a person in the United States goes to the emergency room complaining of head pain. About 1.2 million visits are for acute migraine attacks.

For a complete list of videos, visit our video library