financial market for home loans. Sketch a demand and supply diagram to support your answers.

a. The number of people at the most common ages for home-buying increases.

b. People gain confidence that the economy is growing and that their jobs are secure.

c. Banks that have made home loans find that a larger number of people than they expected are not

repaying those loans.

d. Because of a threat of a war, people become uncertain about their economic future.

e. The overall level of saving in the economy diminishes.

f. The federal government changes its bank regulations in a way that makes it cheaper and easier for

banks to make home loans.
110 4 • Problems

31. Table 4.6 shows the amount of savings and borrowing in a market for loans to purchase homes, measured

in millions of dollars, at various interest rates. What is the equilibrium interest rate and quantity in the

capital financial market? How can you tell? Now, imagine that because of a shift in the perceptions of
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