Financial Sector

Higher than anticipated inflation figures prompt central banks raising discount rates stimulating short-term growth.

A sudden drop in foreign direct investments triggers expansionary monetary policy impulsing lower interest rates.

Private corporations issuing new stocks cause stock prices to dip marginally temporarily slowing economic activity.

Increased government spending financed through debt creates upward pressure on interest rates reducing private sector investments.

It may cause an immediate increase in consumer spending.

It might significantly decrease real interest rates instantly.

It can lead to increased savings due to more predictable returns on investments.

It can result in decreased national income across the board.

Increases due to falling consumption leading to excess supplies of monetary units seeking productive uses, including investments

Fluctuates unpredictably without any discernible pattern or logic

Declines because the drop in national income leads to smaller pools of accessible capital, thus prices must be adjusted downwards to attract borrowers

Stays the same since the actions taken by the monetary authority have no direct correlation to the real interest rate

A change in savings behavior

An alteration in consumer spending habits

A change in demand for loans

A fluctuation in bond prices

It does not affect interest rates or the supply of loanable funds.

It increases the supply of loanable funds and lowers interest rates.

It decreases investment spending directly without affecting interest rates or supply of loanable funds.

It decreases the supply of loanable funds and raises interest rates.

It raises interest rates by increasing competition between lenders and borrowers.

It increases the supply of loanable funds by reducing public borrowing needs.

It has no impact on interest rates but can increase inflationary pressures over time.

It decreases the demand for loanable funds due to less government spending.

The real interest rate falls

The real interest rate becomes negative

The real interest rate stabilizes

The real interest rate rises

The supply of loanable funds will increase.

Investment spending will not be affected.

Interest rates will rise.

Interest rates will fall.

The real interest rate stabilizes

The real interest rate rises

The real interest rate falls

The real interest rate becomes negative

A higher level of income

A decrease in the savings rate

An increase in government borrowing

An increase in the default risk