This assessment deals with the market for loanable funds, marginal propensity to consume, the multiplier effect, and aggregate supply (AS), aggregate demand (AD), and the basic concepts of open-economy macroeconomics

1. A business contemplates building a new manufacturing facility and will need to seek loanable funds of $130 million. It expects that the new facility will yield a 12% return on investment (ROI). Given the current loanable funds market equilibrium depicted in the graph below, is it likely that the firm will borrow the money to build the new facility? Why?

D1 S1 16% 12% 8% 4% S1 D1 O $150 $300 $450 $600 Quantity of Loanable Funds (in millions)