« previous next »

Author Question: Suppose life becomes more unpredictable and households decide to increase their precautionary ... (Read 63 times)

tnt_battle

  • Hero Member
  • *****
  • Posts: 556
on: Jul 1, 2018
Suppose life becomes more unpredictable and households decide to increase their precautionary savings. In this case, the loanable funds model predicts that
 
  A) interest rate goes down, and quantity of borrowed funds increases.
  B) interest rate goes down, and quantity of borrowed funds decreases.
  C) interest rate goes up, and quantity of borrowed funds decreases.
  D) interest rate goes up, and quantity of borrowed funds increases.

Question 2

Suppose government does not allow households to deduct their mortgage interest expenses from their income tax anymore. How this change is represented in the loanable funds model?
 
  A) The supply of funds curve shifts to the left.
  B) The supply of funds curve shifts to the right.
  C) The demand for funds curve shifts to the left.
  D) The demand for funds curve shifts to the right.
Microeconomics ¦ Perloff ¦ 8th Edition
Buy Test-Bank


ynlevi

  • Sr. Member
  • ****
  • Posts: 338
Reply #1 on: Jul 1, 2018
Answer to Question 1

A

Answer to Question 2

C


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

HIV testing reach is still limited. An estimated 40% of people with HIV (more than 14 million) remain undiagnosed and do not know their infection status.

Did you know?

Historic treatments for rheumatoid arthritis have included gold salts, acupuncture, a diet consisting of apples or rhubarb, nutmeg, nettles, bee venom, bracelets made of copper, prayer, rest, tooth extractions, fasting, honey, vitamins, insulin, snow collected on Christmas, magnets, and electric convulsion therapy.

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?

There used to be a metric calendar, as well as metric clocks. The metric calendar, or "French Republican Calendar" divided the year into 12 months, but each month was divided into three 10-day weeks. Each day had 10 decimal hours. Each hour had 100 decimal minutes. Due to lack of popularity, the metric clocks and calendars were ended in 1795, three years after they had been first marketed.

Did you know?

A headache when you wake up in the morning is indicative of sinusitis. Other symptoms of sinusitis can include fever, weakness, tiredness, a cough that may be more severe at night, and a runny nose or nasal congestion.

Basic overview of energy and human life. Basic overview of energy and human life.
Life-cycle of the Sun; sizes are not drawn to scale Life-cycle of the Sun; sizes are not drawn to scale
How to solve all of life's problems How to solve all of life's problems
When using forearm pressure on the top of the shoulder, push with your back foot to increase your ... When using forearm pressure on the top of the shoulder, push with your back foot to increase your ...
As their numbers grow and their resources and health improve, the elderly will enjoy life more and ... As their numbers grow and their resources and health improve, the elderly will enjoy life more and ...
Percentage of higher-income Canadian households Percentage of higher-income Canadian households
Video: Predator- prey competition and symbiosis

For a complete list of videos, visit our video library