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Supply of Loanable Funds

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1. Why is the supply of loanable funds up sloping? why is the demand for loanable funds down sloping? Explain the equilibrium interest rate. List at least 3 factors that might cause the equilibrium interest rates to change.

2. How do the concepts of accounting profit and economic profit differ? Why is the economic profit smaller than accounting profit. What are the three basic sources of economic profit?

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Supply of loanable funds is up sloping because supplier of funds or lenders will be willing to provide more funds at higher interest rates as compared to lower interest rates. Therefore, with increasing interest rates, supply of funds will rise.

Similarly, demand for loanable funds will be down sloping because debtors will be willing to take less funds for investment and other projects at higher rates as the high cost of capital or fund will not yield any benefit to them. Similarly, at lower interest rates, many ...

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Why is the supply of loanable funds up sloping? why is the demand for loanable funds down sloping?

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Aggregate Supply/Demand And Loanable Funds Model

My question has 2 parts to it.

Say there is an annual event that brings a state over 40 million dollars on the week that it runs, bringing tourists from all over the world to the event and millions of dollars from television coverage.

What is the expended change to gross product and the price level likely to be in the short run? How can this be illustrated by an aggregate demand and supply model?

If I assume that the expenditure by the government on this event increases the government's deficit. what will be the likely effect on private sector savings and investment using the loanable funds model?

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