巴德 宏观经济学原理（英文版·第8版）Chapter 10 Eye Ons.pptxVIP

EYE Ons10Finance, Saving,and Investment Interest rates have been at a record low level since 2008.The figure shows that in 2007, on the eve of the global financial crisis, the total amount borrowed in the loanable funds market was $51 trillion.The real interest rate was 2 percent a year. By mid-2009, expected profit had fallen, which decreased investment from $2.2 trillion in 2007 to $1.5 trillion.The demand for loanable funds by households and businesses decreased.The government launched a massive rescue plan, which increased its demand for loanable funds. But the total demand for loanable funds continued to decrease.By 2013, the demand for loanable funds had decreased to DLF13.The Fed increased the supply of loanable funds.By 2013, the supply of loanable funds had increased to SLF13. By 2013, the interest rate was 0.5 percent a year and the quantity of loanable funds was $55 trillion.Without the increase in the supply of loanable funds, the quantity of loanable funds would also have fallen.The increased supply limited the decrease in investment and the severity of the recession. The yield curve shows that in 2016, the U.S. government could borrow by issuing 3-month Treasury Bills at 0.1 percent per year. But on 30-year bonds, it paid almost 2.5 percent. The higher nominal interest rate on longer term bonds reflects inflation expectations. The government is the least risky borrower and pays the lowest interest rate. The riskiest firms (Ccc) pay higher interest rates than the safest ones (Aaa). Events in the market for loanable funds, on both the supply side and demand side, created the global financial crisis.An increase in default risk decreased the supply of loanable funds.The disappearance of some major Wall Street institutions and lowered profit expectations decreased the demand for loanable funds.These institutions include Bear Stearns, Lehman Brothers, Fannie Mae and Freddie Mac, Merrill Lynch, and AIG. But what caused the increase in default risk and the