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Class, would you expect the fund's demand curve for businesses to be steeper than the demand...

Class, would you expect the fund's demand curve for businesses to be steeper than the demand curve for funds by the federal government? Explain.

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Answer #1

Businesses inherently are based on profit while the government is not based on profit, then the business is expected to be more sensitive to changes in interest rate. The government on the other hand is less sensitive to interest rate. So the demand curve for business is more elastic and hence flatter as compared to the government which is less elastic.

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