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Chapter 2 Assignment 4 . Factors that affect equilibrium in the market for loanablefunds For each of the given scenarios, use the graphs to (
Chapter Assignment
Factors that affect equilibrium in the market for loanablefunds
For each of the given scenarios, use the graphs to show what happens in the market for loanable funds and help answer the questions that follow.
Scenario : Individual Retirement Accounts IRAs allow people to shelter some of their income from taxation. Suppose the maximum annual contribution to such accounts is $ per person. Now suppose there is an increase in the maximum contribution, from $ to $ per year.
Market for Loanable Funds
This change causes savers to supply
Ioanable funds. Because the quantity of loanable funds supplied is now
the quantity
of loanable funds demanded, there is
pressure on interest rates. This change in interest rates causes an
in the
quantity of loanable funds demanded.
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