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Suppose that total savings and business investment demand in the economy behaves as shown in the table that follows (dollars are in billions)

Suppose that total savings and business investment demand in the economy behaves as shown in the table that follows (dollars are in billions)
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FINANCE

FIN 350 Module 2: Assignments

Chapter 5 Problems and Issues 5

5. Suppose that total savings and business investment demand in the economy behaves as shown in the table that follows (dollars are in billions):
Total Investment
Demand for Funds Volume of Total
Saving Expected Alternative Market
Interest Rates
$170 $80 5%
$155 $96 6%
$142 $103 7%
$135 $135 8%
$128 $178 9%
$111 $207 10%
$92 $249 11%
$86 $285 12%

According to the classical theory of interest, what equilibrium interest rate will prevail given the above schedules of planned saving and investment? What could cause the equilibrium rate to change?

 

FILE: MS WORD

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