Answer to Question #139665 in Macroeconomics for Ah zhuan

Question

3) Pipeline Asia Group working with Saudi Pipeline Group aims to create giant natural gas transmission business. The deal will create a 91,000-kilometer natural gas pipeline system. Show on a graph the effect of Pipeline Asia Group going to the loanable funds market to finance the deal with Saudi Pipeline Group. Explain the effect on the real interest rate, private saving, and investment.

Answer 1

With the entry of the company to the market for borrowed funds, the demand for these funds will increase, with the supply unchanged, this will lead to an increase in interest and an increase in the amount of funds lent.