Answer:
D) the quantity of funds supplied by households increases.
Explanation:
In loanable markets, price is the cost of loaned money.
So, increase in their price - i.e interest : increases the supply of loanable funds. Interest rates & supply of loanable funds is positively related : more loanable funds supply at higher interest rate, less loanable funds supply at lower interest rates
Hence, increase in real interest rate increases the quantity of funds supplied by households. Such because, increase in interest increases the opportunity cost of consumption expenditure. So, households consume less & save (deposit) more for higher interest rates.
Answer:
A shift from AD 1 to AD 2 and a movement to point B, with a higher price level and higher output.
Explanation:
The above is what the expansionary monetary policy of the Federal government will cause in a situation where a policy was introduced on a short-run.
Taxation shifts a supply curve to the left. At a given level of demand, taxation's reduction of incentives will result in a decrease in the production of goods or services. As shown above, the equilibrium price will rise and the equilibrium quantity will fall.
The suppliers would suppy fewer clothes at each price level