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Author Question: What is the relationship between the real interest rate, the supply of loanable funds and the demand ... (Read 93 times)

vicotolentino

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on: Jun 29, 2018
What is the relationship between the real interest rate, the supply of loanable funds and the demand for loanable funds?
 
  What will be an ideal response?

Question 2

Jeep Cherokees are a normal good. If people's incomes increase, the direct result will be
 
  A) an increase in the supply of the vehicles.
  B) a decrease in the demand for the vehicles.
  C) an increase in the demand for the vehicles.
  D) Both answers A and C are correct.


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pallen55

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The supply of loanable funds has a positive relationship between the real interest rate and the quantity of loanable funds supplied. In a figure, a supply of loanable funds curve has a positive slope. Similarly, the demand for loanable funds is the relationship between the real interest rate and the amount of loanable funds demanded. In a figure, a demand for loanable funds curve has a negative slope.

Answer to Question 2

C


vicotolentino

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Reply #2 on: Jun 29, 2018
Thank you :)


pallen55

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Reply #3 on: Jun 29, 2018
Happy to help you


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