Summary 359- 3 The Demand for Capital 361
The Firm’s Demand for Capital 361
The Economy’s Demand for Investment 365 - 4 The Supply of Capital 365
Households’ Supply of Saving 365
The Economy’s Supply of Saving 367 - 5 Equilibrium in the Capital Market 367
The Equilibrium Interest Rate 367
Changes in the Market Equilibrium 368
Long-Run Trends in the Capital Market 371
Summary 373
Key Concepts 374
Study Exercises 374
Chapter 16 Market Failures and Government Intervention 377
- 1 Basic Functions of Government 378
- 2 The Case for Free Markets 379
Automatic Coordination 380
Innovation and Growth 381
Decentralization of Power 382