Question

You're given the following two equations representing the market for loanable funds: Q L​ =10.6+2.1r Q L​ =58.9−2.6r​ What is the equilibrium quantity of loanable funds? Please round to 1 decimal place.

Answer 1

The equilibrium interest rate and quantity in the capital financial market can be determined by finding the point where the quantity demanded and quantity supplied are equal. A shift in the supply curve can result in a new equilibrium interest rate and quantity.

Step-by-step explanation:

The equilibrium interest rate and quantity in the capital financial market can be determined by finding the point where the quantity demanded and quantity supplied are equal. In Table 4.6, at this equilibrium point, the interest rate is 15% and the quantity loaned and borrowed is $600 billion. If there is a shift in the supply curve resulting in $10 million less supplied at every interest rate, the new equilibrium interest rate would be lower and the new equilibrium quantity would be lower as well.