Question

QUESTIONS Interest $100 Quantity of loanable funds (billions of dollars) Which might produce a new equilibrium interest rate of 8% and a new equilibrium quantity of loanable funds of 375 Million O Households increase their consumption while disposable income stays constant Capital inflows from foreign citizens increase. Profit expectations are more optimistic for business investments, The government's budget deficit shrinks.

Answer 1

Answer
Option 1
the increase in consumption decreases saving and decreases the supply of loanable funds which shifts the supply curve to left and increases interest rate with a decrease in quantity.

The increase in capital inflows increases supply which decreases interest rate and increases the quantity.
the more profit expectations increase demand which increases both interest rate and quantity
the reduce in budget deficit increases the supply of loanable funds which decreases interest rate and increases quantity.