Why is the supply of loanable funds often interest inelastic?
The supply is often interest inelastic because some savers have fixed accumulation goals, i.e., they have a particular target sum in mind. If the interest rate increases, they can reach their goal with less saving. Therefore, an increase in interest rates will not bring forth more saving (lending) from those persons.
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In the United States, estimates of the natural rate of unemployment in recent years have varied between
A) 0 percent and 2 percent. B) 0 percent and 4 percent. C) 5 percent and 6.5 percent. D) 2 percent and 4 percent.
At the current production point on a nation's production possibilities frontier, the marginal benefit of a slice of pizza is 500 tacos while the marginal cost of producing a slice of pizza is 750 tacos
For the nation to produce at the point of allocative efficiency, what should be done?
According to Friedman, changes in the level of aggregate demand
a. are dominated by changes in the supply of money. b. cause the levels of output and employment to deviate from their natural rate for short periods of time. c. can cause movements of the economy away from the natural rate for at least 2 years. d. are dominated by changes in the demand for money. e. Both a and b.
In a perfectly competitive market, which two conditions must be met to achieve long-run equilibrium?
a. Productive efficiency and allocative efficiency b. Allocative efficiency and profit maximization c. Productive efficiency and low average costs d. Zero economic profits and zero accounting profits