Using the figure above, show the effect on the real interest rate and the quantity of loanable funds of an increase in expected profit
What will be an ideal response?
The increase in expected profit increases investment and shifts the demand for loanable funds curve rightward. As the figure shows, the result is that the real interest rate rises (to 8 percent in the figure) and the equilibrium quantity of loanable funds increases (to $4 trillion in the figure).
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Which of the following was a free market philosopher?
a) Karl Marx b) Adam Smith c) Vladimir Lenin d) Friedrich Engels
To calculate GDP by the expenditure method, one must add
A) wages, rents, interest, and profits. B) consumption spending, investment spending, government spending, and net exports. C) labor, natural resources, entrepreneurship, and capital. D) consumption spending, investment spending, government spending, and exports.