Suppose the demand for the Diane Playing Cards has fallen. Explain what will happen to the firm's demand for loanable funds
A decrease in demand for cards decreases the price of the cards, which leads to a lower MRP of capital for
the firm, since MRP = MPP × P. As a result, the firms' demand for loanable funds will fall (shift to the
left) because the demand for loanable funds is the marginal revenue product of capital.
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Suppose the government increases the corporate income tax rate. This is
A) an expansionary fiscal policy that will shift the aggregate demand curve to the right by an amount equal to the initial change in corporate income tax revenue times the spending multiplier. B) a contractionary fiscal policy that will shift the aggregate demand curve to the left by an amount equal to the initial change in investment times the spending multiplier. C) a contractionary fiscal policy that will shift the aggregate demand curve to the left by an amount equal to the initial change in the corporate income tax rate times the spending multiplier. D) an automatic fiscal policy that will shift the aggregate demand curve to the left by an amount equal to the initial change in investment times the spending multiplier.
Identify changes in two variables that would shift the supply curve of dollars to the right. Identify changes in two variables that would shift the demand curve for dollars to the right
What will be an ideal response?