b. Suppose that new regulations make it more difficult for individuals to get loans from financial institutions. Which side of the market - savings or borrowing - would be affected by this? Show the change in your diagram and explain the predicted outcome. |

b. Suppose that new regulations make it more difficult for individuals to get loans from financial institutions. Which side of the market - savings or borrowing - would be affected by this? Show the change in your diagram and explain the predicted outcome. |

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter17: Financial Markets

Section: Chapter Questions

Problem 10RQ: Why can firms not just use their own profits for financial capital, with no need for outside...

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Question

b. Suppose that new regulations make it more difficult for individuals to get loans from
financial institutions. Which side of the market - savings or borrowing - would be affected
by this? Show the change in your diagram and explain the predicted outcome.
|

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Step 1: Explain Borrowing and Savings :

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Step 2: Explain Effect of new regulation

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Step 3: Draw diagram of Original Situation:

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Step 4: Draw diagram of Change due to New Regulations

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