Refer to the figure below to answer the following questions.

Figure 23.2.5
-Refer to Figure 23.2.5.In Figure 23.2.5,the supply of loanable funds curve is SLF? and the demand for loanable funds curve is DLF?.An expansion that increases disposable income and expected profit

Question

Refer to the figure below to answer the following questions.
  
Figure 23.2.5
-Refer to Figure 23.2.5.In Figure 23.2.5,the supply of loanable funds curve is SLF? and the demand for loanable funds curve is DLF?.An expansion that increases disposable income and expected profit

Quizplus · Accepted Answer

An expansion that increases disposable income and expected profit will result in an increase in investment opportunities and thus a higher demand for loanable funds, which will shift the demand for loanable funds curve rightward to curve DLF?. At the same time, households and firms will save more due to the increase in disposable income, thus increasing the supply of loanable funds. This will shift the supply of loanable funds curve rightward to curve SLF?. Therefore, both curves will shift rightward, resulting in an increase in the equilibrium interest rate and a higher quantity of loanable funds supplied and demanded.

Refer to the Figure Below to Answer the Following Questions