Question
The table below shows Demand and Supply for loanable fund at given time. Real interest rate Quantity of loanable fund demanded (billion $) Quantity of
The table below shows Demand and Supply for loanable fund at given time.
Real interest rate | Quantity of loanable fund demanded (billion $) | Quantity of loanable fund supplied (billion $) |
0.01 | 1000 | 400 |
0.02 | 950 | 450 |
0.03 | 900 | 500 |
0.04 | 850 | 550 |
0.05 | 800 | 600 |
0.06 | 750 | 650 |
0.07 | 700 | 700 |
0.08 | 650 | 750 |
0.09 | 600 | 800 |
0.10 | 550 | 850 |
0.11 | 500 | 900 |
0.12 | 450 | 950 |
0.13 | 400 | 1000 |
0.14 | 350 | 1050 |
0.15 | 300 | 1100 |
Instructions:
1-Using excel, find the equilibrium real interest rate and quantity of loanable fund.
2-show the equilibrium on a graph.
3-If this country experiences a recession business cycle phase that decreases the demand for loanable fund by $200 billion.
a-Find the new equilibrium real interest rate and quantity of loanable fund.
b-Show the shift on the graph.
4-list Two factors that shift SLF rightward and two factors that shift DLF rightward
5-What is the meaning of crowding out? Support your answer with a graph.
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