Business, 12.03.2020 18:31, destineyburger2

Three students have each saved $1,000. Each has an investment opportunity in which he or she can invest up to $2,000. Here are the rates of return on the students’ investment projects:

Student Return (Percent)
Harry 5
Ron 8
Hermione 20
Assume borrowing and lending is prohibited, so each student uses only personal saving to finance his or her own investment project.

Now suppose their school opens up a market for loanable funds in which students can borrow and lend among themselves at an interest rate r . A student would choose to be a lender in this market if his or her expected rate of return isless than r . Suppose the interest rate is 6 percent. Among these three students, the quantity of loanable funds supplied would be $, and quantity demanded would be $. Now suppose the interest rate is 12 percent. Among these three students, the quantity of loanable funds supplied would be $ , and quantity demanded would be $ .

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Three students have each saved $1,000. Each has an investment opportunity in which he or she can inv...