Use the following to answer questions:
-(Figure: Loanable Funds) Use Figure: Loanable Funds. Which scenario might produce a new equilibrium interest rate of 5% and a new equilibrium quantity of loanable funds of $150 billion?

Question

Use the following to answer questions: 
-(Figure: Loanable Funds) Use Figure: Loanable Funds. Which scenario might produce a new equilibrium interest rate of 5% and a new equilibrium quantity of loanable funds of $150 billion?

Quizplus · Accepted Answer

An increase in capital inflows from other nations would shift the loanable funds supply curve to the right, leading to a decrease in the equilibrium interest rate and an increase in the equilibrium quantity of loanable funds. A new equilibrium with an interest rate of 5% and a quantity of $150 billion would occur if this shift was large enough to offset any other factors that could affect the market, such as changes in the demand for loanable funds. None of the other scenarios listed would have a clear and direct effect on the loanable funds market that would lead to this specific outcome.

Use the Following to Answer Questions