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Author Question: The amount of money that people wish to hold to use in transactions varies directly with A) the ... (Read 106 times)

123654777

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on: Jun 30, 2018
The amount of money that people wish to hold to use in transactions varies directly with
 
  A) the income tax rate. B) their planned near-term purchases.
  C) the money supply. D) the interest rate.

Question 2

What is the loanable funds market? What happens if the real interest rate in the market is held above the equilibrium interest rate?
 
  What will be an ideal response?


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hollysheppard095

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Reply #1 on: Jun 30, 2018
Answer to Question 1

B

Answer to Question 2

The loanable funds market is the market where borrowers obtain funds from savers.
In such a market, if the real interest rate is held above the equilibrium interest rate, the quantity of credit supplied will exceed the quantity of credit demanded. This will create a downward pressure on the real interest rate.


123654777

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Reply 2 on: Jun 30, 2018
Thanks for the timely response, appreciate it

ultraflyy23

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Reply 3 on: Yesterday
Excellent

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