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Suppose the Following Equations Give the Demand and Supply for Loanable

question 72

Essay

Suppose the following equations give the demand and supply for loanable funds in billions of dollars; r is the real interest rate in percentage points :
QD = 160 - 10r
QS = -20 + 20r
a) Calculate the equilibrium savings, investment, and interest rate.
b) How much is the total amount received by lenders in interest?
c) Calculate the gains to lenders from financial transactions (producer surplus).
d) Calculate the gains to borrowers (the equivalent of consumer surplus).


Definitions:

[Cl-]

The chloride ion, a chlorine atom that has gained one electron to achieve a stable electronic configuration, commonly found in salt compounds.

HAc

A common abbreviation for acetic acid, a weak organic acid with the formula CH3COOH, known for its sour taste and pungent smell.

K

Symbol for potassium, a chemical element with atomic number 19, essential for various functions in living organisms.

[HA]

May refer to the concentration of hyaluronic acid in a solution, often mentioned in the context of chemical and biological studies or cosmetics formulations.

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