in a in the economy’s supply curve for capital.
c. An increase in expected future income leads to a(n)
in current household spending. The result is a(n)
in household saving and therefore a(n)
in the quantity of capital supplied at any given interest
rate. This is represented by a in the economy’s
supply curve for financial capital.
3. Fill in the blanks to make the following statements correct.
a. The economy’s equilibrium interest rate is determined
where. At an interest rate above the equilibrium
interest rate, the quantity of capital supplied
quantity of capital demanded, and the result is a(n)
in the interest rate.
b. At an interest rate below the equilibrium interest rate, the
quantity of capital demanded the quantity of
capital supplied, and the result is a(n) in the
interest rate.
c. Beginning in equilibrium in the capital market, an
increase in the supply of financial capital leads to a(n)
in the equilibrium interest rate, a(n)
borrowing by firms, and a(n) in the equilibrium
level of investment and saving.
d. Beginning in equilibrium in the capital market, an
increase in the demand for financial capital leads to a(n)
in the equilibrium interest rate, a(n)
desired saving by households, and a(n) in the
equilibrium level of investment and saving.
