For parts a)-d), evaluate the effect of each of the following events on the market for loanable funds. Explain the effects on savings, investment, and the (neutral) real interest rate. a) The government runs a government budget surplus instead of a deficit. b) The government decides to forgive some of the $66 billion in student loan debt. c) Chinese investors stop sending their funds to Australia, reducing net capital inflows. d) The nominal interest rate rises 1% in response to a 1% rise in the inflation rate.

For parts a)-d), evaluate the effect of each of the following events on the market for loanable funds. Explain the effects on savings, investment, and the (neutral) real interest rate. a) The government runs a government budget surplus instead of a deficit. b) The government decides to forgive some of the $66 billion in student loan debt. c) Chinese investors stop sending their funds to Australia, reducing net capital inflows. d) The nominal interest rate rises 1% in response to a 1% rise in the inflation rate.

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter12: The American Labor Force

Section: Chapter Questions

Problem 9AA

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