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If the return on capital is 12 percent and the price for loanable funds is 9 percent, then

mickied

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7 months ago

If the return on capital is 12 percent and the price for loanable funds is 9 percent, then

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firms will not be willing to borrow loanable funds until either the return on capital decreases or the price for loanable funds increases, because the market for loanable funds is not in equilibrium and businesses will be wary of further investment.

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firms will realize that if they borrow loanable funds and invest in capital goods, it will cause the return on capital to decrease, so they won't want to borrow the funds.

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savers will realize that they can earn more if they invest their savings in capital, so they will withdraw their savings and supply them to firms at 14 percent.

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none of the above

Textbook

Economics

Edition: 12^th

Author: Arnold

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catdaster

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More solutions for this book are available here

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mickied Author

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Thanks for your help!!

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I appreciate what you did here, answered it right Smiling Face with Open Mouth

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This site is awesome

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