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QUESTION

Explain how each of the following events would affect the supply of loanable funds curve:The economy is in a recession so people's disposable income...

1.     Explain how each of the following events would affect the supply of loanable funds curve:

a.  The economy is in a recession so people's disposable income is lower.

b.  The stock market is booming so people's wealth is higher.

c.  The future looks a bit more grim, so expected future income is lower.

d.  The real interest rate increases.

2.     Why is the nominal interest rate the opportunity cost of holding money?

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