HomeworkLib
Question

If you envision a loanable funds framework for the entire world (rather than for an individual...

If you envision a loanable funds framework for the entire world (rather than for an individual country), what has to be true about savings and investment?

Savings must be greater than investment

Savings must be less than investment

Savings must be equal to investment

There is no way to answer this from the information given

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Answer : The answer is option C.

We get from the economics study that savings is equal to investment. Savings is the part of total income which remains after all expenditures. Investment comes from this savings. This means that, savings = investment. Loan is an investment. This loanable funds comes from savings. In case of entire world the loanable funds will come from savings of entire world and this loanable funds is the investment of entire world. Now if I imagine about the loanable funds of entire world then the "savings must be equal to investment". Therefore, option C is correct.

0 0
Add a comment
Know the answer?
Add Answer to:
If you envision a loanable funds framework for the entire world (rather than for an individual...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • International economics Loanable funds markets 1. International BoP example. The diagram is for the loanable funds...

    International economics Loanable funds markets 1. International BoP example. The diagram is for the loanable funds market in U.S. Assume that the world loanable funds rate is 3%. Assume the government budget is balanced. Real Int. Rate SLF domestic sources SLF from world DLF 70 90 100 Q of Loanable Funds In billions a. If the U.S. enacts a law that allows no international transactions, what would be: Real interest rate: Quantity of private savings: Quantity of funds desired for...

  • it is budget surplus, rather than deficit 4. Suppose the market for loanable funds is current...

    it is budget surplus, rather than deficit 4. Suppose the market for loanable funds is current in equilibrium, with zero capital inflows or capital outflows and zero government budget deficit. (a) Using a supply and demand diagram, depict this situation. 5 points. (b) Suppose the government begins to run a budget surplus; assuming all else equal, depict the effect this will have on the interest rates and total lending. 5 points. (c) What effect will this deficit have on the...

  • Use the loanable funds market to illustrate the effect of the following events on the equilibrium....

    Use the loanable funds market to illustrate the effect of the following events on the equilibrium. Illustrate the effects on the interest rate and quantity of investment-savings (explain thoroughly): a) The proportion of retired people in the population goes up. Think that usually retired people generally save less than working people at any interest rate. b) At any given interest rate, consumers decide to save more (assume the budget balance is zero). c) At any given interest rate, businesses become...

  • 5. The market for loanable funds and government policy The following graph shows the market for...

    5. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (Note: You will not be graded on any changes you make to the graph.) Demand - 0 Supply INTEREST RATE (Percent)...

  • (Decrease or Increase) Attempts: Keep the Highest: /4 5. The market for loanable funds and government...

    (Decrease or Increase) Attempts: Keep the Highest: /4 5. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (Note: You will not be graded on any changes you make to the...

  • The following graph shows the market for loanable funds. For each of the given scenarios, adjust...

     The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (Note: You will not be graded on any changes you make to the graph.) Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at banks. Initially, the...

  • 1. Th e supply of loanable funds: comes from households that consume all of their income...

    1. Th e supply of loanable funds: comes from households that consume all of their income results from the desire to accumulate wealth for retirement or for major future expenditures c. is inversely related to the interest rate d. does not depend on the interest rate 2. Both consumer demand and investment demand for loanable funds will be: directly related to the interest rate inversely related to the interest rate c. unrelated to the interest rate A decrease in expected...

  • The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow.

     5. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (Note: You will not be graded on any changes you make to the graph.) Scenario 1: Individual Retirement Accounts (IRAs) allow people to...

  • 1) If Inventory investment is higher than firms planned, a) actual investment is greater than planned...

    1) If Inventory investment is higher than firms planned, a) actual investment is greater than planned investment. b) actual investment is less than planned investment. c) actual investment must be negative. d) actual and planned investment are equal. Refer to the information provided in Figure 8.8 below to answer the questions that follow. Figure 8.8 2) Refer to Figure 8.8. The amount of planned investment decreases if the interest rate a) rises from 4% to 8%. b) remains at 8%....

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT