Kazakhstan creates "special economic zones" where businesses are encouraged to invest and are given incentives for doing so. Which graph shows the effect of these newly created zones on the loanable funds market?

Question

Quizplus · Accepted Answer

The creation of special economic zones would lead to an increase in investment demand, shifting the demand curve for loanable funds to the right. This would lead to an increase in the equilibrium interest rate and quantity of loans. Graph B shows this shift in demand and the resulting increase in the equilibrium interest rate and quantity of loans.

Kazakhstan Creates "Special Economic Zones" Where Businesses Are Encouraged to Invest