Capital markets and labor markets are intimately connected

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College students often borrow money to attend school. Generally, the plan is to pay loans back through future earnings. In this way, capital markets and labor markets are intimately connected. Assume that the market for education and the market for college educated labor are perfectly competitive. Show what happens to the market for education and the market for college educated labor if the government increases the number of very low interest loans.

who gains and who loses by this policy?

Producers of Schooling- gain or lose

college graduates - gain or lose

consumers of education (without loans)- gain or lose

Employers of college graduates- gain or lose

Reference no: EM13832572

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