The quantity of loanable funds supplied is normally expected

The quantity of loanable funds supplied is normally expected to be more elastic, meaning more sensitive to interest rates, than the quantity of loanable funds demanded. True False The Fed controls the amount of reserves held by depository institutions and can influence the amount of savings that can be converted into loanable funds. True False The equilibrium interest rates is the rate that equates the aggregate demand for funds with the aggregate supply of loanable funds. True False

Solution

8. False

The quantity of loanable funds supplied is normally less interest elastic than the demand for loanable funds.

9. False

The Fed controls 2 primary interest rates:one is the federal funds rate, is the rate that banks charge each other for overnight loans and the second is discount rate, which is the interest rate that the Fed charges on loans it make it to banks.

10. True

The equilibrium interest rate equates the aggregate demand for funds with the aggregate supply of loanable funds.

11. True

12. True