Three students have each saved $1,000. Each has an investment opportunity in which he or she can invest up to $2,000. Here are the rates of return on the students’ investment projects: Student Return (Percent) Harry 5 Ron 8 Hermione 20 Assume borrowing and lending is prohibited, so each student uses only personal saving to finance his or her own investment project. Now suppose their school opens up a market for loanable funds in which students can borrow and lend among themselves at an interest rate r . A student would choose to be a lender in this market if his or her expected rate of return isless than r . Suppose the interest rate is 6 percent. Among these three students, the quantity of loanable funds supplied would be $_____, and quantity demanded would be $______. Now suppose the interest rate is 12 percent. Among these three students, the quantity of loanable funds supplied would be $ ______, and quantity demanded would be $ _____.

Answers 2

How would the question best fit the bar thing

AI generated Answer

At the 6 percent rate, the quantity of loanable funds supplied by the three students would be $3,000 (the total of their personal savings). The quantity demanded would be $2,000, as Ron and Harry would not want to lend at a rate that is less than their return; they would keep their savings invested in more profitable ventures. At the 12 percent rate, the quantity of loanable funds supplied would remain at $3,000, since the students cannot borrow money due to the prohibition on borrowing and lending. However, the quantity of loanable funds demanded would increase to $3,000, as all three students would choose to be lenders in this market, given their expected returns are all below the 12 percent rate.
  • Rate an answer:

Do you know an answer? Add it here!

Can't find the answer?

Unable to find an answer to your question?

Don't worry! There are several alternative approaches you can try to resolve your query. Here are some tips to help you find answers in different ways:

  1. Reframe your question: Sometimes, the way you phrase your question can limit your search results. Try rephrasing it using different keywords or providing more context to get better results.
  2. Utilize social media: Post your question on social media platforms, particularly those focused on professional or specialized topics. Twitter, LinkedIn, and Facebook groups can connect you with individuals who may have relevant expertise or experiences to share.
  3. Consult subject matter experts: Reach out to experts in the field related to your question. Many professionals are willing to help and share their knowledge. You can connect with them through email, LinkedIn messages, or by attending relevant conferences or events.
  4. Use our website to find your question through the search box above, or you can sign up to ask your question for our big educational community. Our experts will review your question, and you will get a quick and quality answer.
  5. Collaborate with others: If your question is related to a specific project or problem, consider collaborating with others who might have complementary skills or knowledge. Teamwork can lead to innovative solutions and shared insights.

Remember, the process of finding answers often involves persistence, creativity, and an open mind. By exploring various resources, reaching out to others, and being proactive in your search, you increase your chances of finding the information you need. Happy quest for knowledge!

Login with Google


Forgot your password?

I don't have an account, I want to Register

Choose a language and a region
How much to ban the user?
1 hour 1 day 100 years