(Solved): Macroeconomic data do not show a strong correlation between investment and interest rates. Use the ...

Macroeconomic data do not show a strong correlation between investment and interest rates. Use the example of the loanable funds market below to examine why this might be the case. a. Suppose the demand for loanable funds is stable, but the supply fluctuates from year to year. Which of the following may cause the supply of loanable funds to decrease? Choose all answers that apply. A temporary fall in consumer incomes. A decrease in the interest rate. An increase in government spending. b. Suppose the supply of loanable funds is stable, but the demand fluctuates from year to year. Which of the following may cause the demand for loanable funds to increase? Choose all answers that apply. A decrease in the interest rate. An increase in the money supply. A positive outlook on a firm's expectations about the future. c. Suppose both supply of and demand for loanable funds fluctuate from year to year. Scenario a suggests correlation between investment and interest rates. Scenario b suggests correlation between investment and interest rates. Scenario \( \mathrm{e} \) suggests correlation between investment and interest rates. a negative no clear a positive d. In thinking about scenarios \( \mathbf{a}, \mathbf{b} \), and \( \mathbf{c} \), which one seems the most likely to occur and to explain why tne macroconomic data show a weak relationship between investment and interest rates?