What determines the demand for loanable funds and what makes it change?
What will be an ideal response?
The demand for loanable funds depends on the real interest rate and expected profit. If the real interest rate falls and nothing else changes, the quantity of loanable funds demanded increases. Conversely, if the real interest rate rises and everything else remains the same, the quantity of loanable funds demanded decreases. Movements along the loanable funds demand curve illustrate these events. If the expected profit increases and nothing else changes, the demand for loanable funds increases and the demand for loanable funds curve shifts rightward. If the expected profit decreases and everything else remains the same, the demand for loanable funds decreases and the demand for loanable funds curve shifts leftward.
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What three factors that were critical to economic prosperity did Adam Smith observe, and later publish in The Wealth of Nations?
What will be an ideal response?
In an economy, the portion of household spending that occurs independent of household income is known as
A) autonomous consumption. B) dissavings. C) the marginal propensity to consume. D) the consumption function.