How does each of the following shift the supply of loanable funds and the demand for loanable funds curves? What is the effect of each on the equilibrium real interest rate and equilibrium quantity of loanable funds?
a. Households' disposable incomes increase
b. An increase in expected profit
a. Saving increases and the supply of loanable funds curve shifts rightward. The real interest rate falls and the quantity of loanable funds increases.
b. Investment demand increases and the demand for loanable funds curve shifts rightward. The real interest rate rises and the quantity of loanable funds increases.
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Refer to the figure above. For an economy starting from the potential output a decrease in planned investment in the short run results in a
A. Recessionary output gap B. Expansionary output gap C. Increase in potential output D. Decrease in potential output
Which of the following could best be categorized as a public good?
A) an apartment in a public housing project B) a pumpkin pie C) public fireworks D) a race track