Assume that the government has run out of retirement funds, and people need to rely on...

Assume that the government has run out of retirement funds, and people need to rely on themselves for retirement. In the loanable funds market, which curve shifts to which direction?

Expert Solution

Assume that the government has run out of retirement funds, and people need to rely on themselves for retirement. In the loanable funds market, which curve shifts to which direction?

---

The market for loanable funds consists of two main curves:

Supply of loanable funds - which comes from national savings
Demand for loanable funds - which comes from borrowing, comprising mainly of consumers and firms

---

When the government runs out of retirement funds, it means that the supply of loanable funds will be affected. Now, people will need to withdraw money from their own past savings.

In total, the Supply of loanable funds will decrease. This is due to a reduction in both public and private savings.

The Supply curve will shift to the left, raising the interest rate and lowering the overall quantity of loanable funds available. This will make borrowing costlier.

Rahul Sunny answered 7 months ago

Retirement Paths Compare the following retirement paths. For each retirement plan assume the individuals need 2.5...

Retirement Paths Compare the following retirement paths. For each retirement plan assume the individuals need 2.5 million dollars to retire. Assume a rate of return of 8% APR, and current balance of $0. Plan A: start making monthly contributions immediately (annuity due) for the next 35 years. Calculate the monthly contribution needed to achieve the retirement goal. Create a column illustrating the monthly account balance. Plan B: start making monthly contributions 10 years from today, (t=120 is first payment) and...

Two people (Person A and B) make identical contributions to their retirement funds, and both hope...

Two people (Person A and B) make identical contributions to their retirement funds, and both hope to retire on the same date. Person A starts making contributions 5 years before Person B. Which one will have more money at retirement? Two people (Person A and B) make identical contributions to their retirement funds, and both hope to retire on the same date. Person A starts making contributions 5 years before Person B. Which one will have more money at retirement?...

Lesson One Discussion Question: People differ on the need for and role of the government. Government...

Lesson One Discussion Question: People differ on the need for and role of the government. Government is the legitimate use of force to control behavior. It is legitimate in that citizens have surrendered some rights willingly to government in exchange for the services provided by the government. The Preamble to the Constitution indicates the willingness of citizens to surrender to the government for the sake of common good (to establish justice, insure domestic tranquility and secure the blessing of liberty)....

Has Covid-19 affected retirement for many people?

Many people unfortunately don't think about retirement and pension funds until its time and then its...

Many people unfortunately don't think about retirement and pension funds until its time and then its usually too late. Briefly discuss what you think about pension funds and the role that they serve individuals or corporations. Pension fund companies are also heavily invested into the capital markets. What role do they serve individuals or companies and provide one advantage and disadvantage.

Suppose that the government of an economy that is in its long-run equilibrium gives out money...

Suppose that the government of an economy that is in its long-run equilibrium gives out money to most of the residents. Using the IS-LM and AS-AD model, describe both the short-run effects and the long-run effects of the following changes on national income, the interest rate, the price level, consumption, investment, and real money balances. Make sure to use both words and figures.

What happens to aggregate demand if people want to save more for retirement and the government raises taxes?

What happens to aggregate demand if people want to save more for retirement and the government raises taxes? a. Aggregate demand shifts right. b. Aggregate demand shifts left. c. If people save more, aggregate demand shifts left: if the government raises taxes, aggregate demand shifts right. d. If people save more, aggregate demand shifts right; if the government raises taxes, aggregate demand shifts left.

Assume you are the CEO of a large farm equipment manufacturer.You need additional funds to...

Assume you are the CEO of a large farm equipment manufacturer. You need additional funds to finance your operations. You must decide whether to finance your operations with debt, the issuance of common stock or by reinvesting the profits generated by the business. Please indicate how you are going to finance the operations and support your decision. You can only choose one.

A government study concluded that 45% of people receiving Social Security payments also receive retirement income...

A government study concluded that 45% of people receiving Social Security payments also receive retirement income from a private IRA. We decided to take a sample of 200 people receiving Social Security payments and asked them if they also receive retirement income from a private IRA. Define the random variable x to be the number of people who also receive retirement income from a private IRA. Showing your work in Excel as demonstrated in class, what is the probability that...

How many people need to be surveyed (out of 16,000) at minimum in order to learn...

How many people need to be surveyed (out of 16,000) at minimum in order to learn about their smartphone preference?

Question