Assuming the economy was in equilibrium,use the following information to determine the amount of funds supplied to the loanable funds market.
$$\begin{array} { | l | l | }
\hline \text { Consumption Spending } & \$ 3.5 \text { tillian } \
\hline \text { Net Taxes } & \$ 2.7 \text { tillian } \
\hline \text { Hausehold Seving } & \$ 2.5 \text { tillian } \
\hline \text { Gvestment Spenfing } & \$ 2.2 \text { tillian } \
\hline \text { Gavernment purchases } & \$ 3.0 \text { trillian } \
\hline
\end{array}$$
A) $2.2 trillion
B) $2.5 trillion
C) $2.7 trillion
D) $3.0 trillion
E) $5.2 trillion

Question

Assuming the economy was in equilibrium,use the following information to determine the amount of funds supplied to the loanable funds market.
$$\begin{array} { | l | l | } 
\hline \text { Consumption Spending } & \$ 3.5 \text { tillian } \
\hline \text { Net Taxes } & \$ 2.7 \text { tillian } \
\hline \text { Hausehold Seving } & \$ 2.5 \text { tillian } \
\hline \text { Gvestment Spenfing } & \$ 2.2 \text { tillian } \
\hline \text { Gavernment purchases } & \$ 3.0 \text { trillian } \
\hline
\end{array}$$
A) $2.2 trillion
B) $2.5 trillion
C) $2.7 trillion
D) $3.0 trillion
E) $5.2 trillion

Quizplus · Accepted Answer

In a simplified loanable funds market, funds supplied come from savings, which include household savings and government surpluses (net taxes minus government purchases). Therefore, the amount of funds supplied to the loanable funds market would be the sum of household savings and the government surplus:

Household Savings + Government Surplus = $2.5 trillion + ($2.7 trillion - $3.0 trillion) = $2.5 trillion

Option B) is the only answer that matches this result.

Assuming the Economy Was in Equilibrium,use the Following Information to Determine