/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q17 How do economists define equilib... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 4: Q17 (page 104)

How do economists define equilibrium in financial

markets?

Short Answer

Expert verified

Equilibrium in financial markets is determined when market demand for funds = market supply of funds, and the respective curves intersect.

Step by step solution

01

: 

Market Equilibrium is an economic state in which market demand & market supply are balanced & prices are stable.

In case of financial markets also, equilibrium is determined as per market demand & market supply of funds.

Market demand for funds is inversely related to their price ie interest rate. Market Supply of funds is directly related to their price ie interest rates.

02

: 

Market Supply curve is upward sloping and market demand curve is downward sloping.

Equilibrium is determined where market demand = market supply, and demand & supply curves intersect.

The point of intersection gives equilibrium interest rate on y axis, and equilibrium quantity of funds demanded & supplied on x axis.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Under what circumstances would a minimum wage be a nonbinding price floor? Under what circumstances would a living wage be a binding price floor?

Suppose the U.S. economy began to grow more rapidly than other countries in the world. What would be the likely impact on U.S. financial markets as part of the global economy?

A price ceiling will have the largest effect:

a. substantially below the equilibrium price

b. slightly below the equilibrium price

c. substantially above the equilibrium price

d. slightly above the equilibrium price

Predict how each of the following events will raise or lower the equilibrium wage and quantity of oil workers in Texas. In each case, sketch a demand and supply diagram to illustrate your answer.

a. The price of oil rises.

b. New oil-drilling equipment is invented that is cheap and requires few workers to run.

c. Several major companies that do not drill oil open factories in Texas, offering many well-paid jobs outside the oil industry.

d. Government imposes costly new regulations to make oil-drilling a safer job.

Select the correct answer. A price ceiling will usually shift:

a. demand

b. supply

c. both

d. neither
See all solutions

Recommended explanations on Economics Textbooks

Taxation Economics

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.