Which of the following would normally be expected to result in an increase in the supply of funds,all else equal?
I. The perceived riskiness of all investments decreases.
II. Expected inflation increases.
III. Current income and wealth levels increase.
IV. Near term spending needs of households increase as energy costs rise.
A)I and III only
B)II and III only
C)II,III,and IV only
D)I and IV only
E)I,II,III,and IV

Question

Quizplus · Accepted Answer

I. The perceived riskiness of all investments decreases: This would make investors more willing to invest and hence, increase the supply of funds.

II. Expected inflation increases: This would decrease the supply of funds as investors would demand higher returns to offset the effects of inflation.

III. Current income and wealth levels increase: This would increase savings and investment, hence, increasing the supply of funds.

IV. Near term spending needs of households increase as energy costs rise: This would decrease savings and investment, hence, decreasing the supply of funds.

Which of the Following Would Normally Be Expected to Result