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Macroeconomics 11th Edition by Michael Parkin
Edition 11ISBN: 9780133423884Macroeconomics 11th Edition by Michael Parkin
Edition 11ISBN: 9780133423884 Exercise 11
Use the following information to work Problem.
In 2012, the Lee family had disposable income of $80,000, wealth of $140,000, and an expected future income of $80,000 a year. At a real interest rate of 4 percent a year, the Lee family saves $15,000 a year; at a real interest rate of 6 percent a year, they save $20,000 a year; and at a real interest rate of 8 percent, they save $25,000 a year.
In 2013, suppose that the stock market crashes and the default risk increases. Explain how this increase in default risk influences the Lee family's supply of loanable funds curve.
In 2012, the Lee family had disposable income of $80,000, wealth of $140,000, and an expected future income of $80,000 a year. At a real interest rate of 4 percent a year, the Lee family saves $15,000 a year; at a real interest rate of 6 percent a year, they save $20,000 a year; and at a real interest rate of 8 percent, they save $25,000 a year.
In 2013, suppose that the stock market crashes and the default risk increases. Explain how this increase in default risk influences the Lee family's supply of loanable funds curve.
Explanation
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Stock market crisis and the increase lev...
Macroeconomics 11th Edition by Michael Parkin
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