Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 26, Problem 3MCQ
To determine
To find:
The option that correctly states the impact of an increase in the loanable funds market.
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Students have asked these similar questions
What is the effect of a fall in the real interest rate on the demand for loanable funds?
A fall in the real interest rate _______.
A.
increases the quantity of loanable funds demanded down along the demand curve
B.
decreases the quantity of loanable funds demanded up along the demand curve
C.
decreases the demand for loanable funds and shifts the demand curve leftward
D.
increases the demand for loanable funds and shifts the demand curve rightward
#18. What would happen in the market for loanable funds if the government were to increase the tax on interest income?
a
The supply of loanable funds would shift right.
b
The demand for loanable funds would shift right.
c
The supply of loanable funds would shift left.
d
The demand for loanable funds would shift left.
The demand for loanable funds has a ________ slope because the lower the interest rate, the ________ number of investment projects are profitable, and the ________ the quantity of loanable funds demanded.
A.
negative; lesser; greater
B.
positive; lesser; lesser
C.
negative; greater; greater
D.
positive; greater; greater
E.
negative; greater; lesser
QUESTION 14
The statement "This Dell laptop costs $1,200" illustrates which function of money?
A.
Liquidity.
B.
Medium of exchange.
C.
Standard of deferred payment.
D.
Store of value.
E.
Unit of account.
Chapter 26 Solutions
Foundations of Economics (8th Edition)
Ch. 26 - Prob. 1SPPACh. 26 - Prob. 2SPPACh. 26 - Prob. 3SPPACh. 26 - Prob. 4SPPACh. 26 - Prob. 5SPPACh. 26 - Prob. 6SPPACh. 26 - Prob. 7SPPACh. 26 - Prob. 8SPPACh. 26 - Prob. 9SPPACh. 26 - Prob. 1IAPA
Ch. 26 - Prob. 2IAPACh. 26 - Prob. 3IAPACh. 26 - Prob. 4IAPACh. 26 - Prob. 5IAPACh. 26 - Prob. 6IAPACh. 26 - Prob. 7IAPACh. 26 - Prob. 8IAPACh. 26 - Prob. 9IAPACh. 26 - Prob. 10IAPACh. 26 - Prob. 1MCQCh. 26 - Prob. 2MCQCh. 26 - Prob. 3MCQCh. 26 - Prob. 4MCQCh. 26 - Prob. 5MCQCh. 26 - Prob. 6MCQCh. 26 - Prob. 7MCQCh. 26 - Prob. 8MCQ
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Similar questions
- An increase in interest rate would lead to a _____ it's supply of loanable funds a. No effect b. None c. Increase d. Decrease #### Correct answer //////arrow_forward12. Suppose the interest rate decreases. Other things constant, how will the loanable funds market be affected? a. The demand for loanable funds curve will shift to the right. b. The demand for loanable funds curve will shift to the left. c. The quantity of loanable funds demanded will increase. d. The quantity of loanable funds supplied will increase. 13. Suppose a research lab fired a chemist, and then an environmental protection group hired the chemist at the same salary. What would be the net effect of these events on aggregate demand? a. The aggregate demand would shift rightward. b. The aggregate demand would shift leftward. c. The aggregate demand would become steeper. d. The aggregate demand would remain the same.arrow_forwardIn the loanable funds market, if firms become more optimistic about future profitability, then the a demand for loanable funds will increase, interest rates will increase, and private sector investment spending will increase. b demand for loanable funds will decrease, interest rates will decrease, and the equilibrium quantity of borrowing will decrease. c supply of loanable funds will increase, interest rates will decrease, and the equilibrium quantity of borrowing will increase. d supply of loanable funds will increase, interest rates will increase, and private sector investment spending will increase.arrow_forward
- Suppose the long-term real interest falls. In the (private sector) loanable funds market. the result will be. a. the demand for loanable funds curve shifts to the right b. the supply of loanable funds curve shifts to the left c. the demand for Ioanable funds curve does not shift to the right nor does the supply of loanable funds cunve shift to the left d. the demand for loanable funds curve shifts to the right and the supply of loanable funds curve shifts to the leftarrow_forwardScenario 1: The economy enters a recession driving down the demand for homes nationwide. What is the expected impact on the demand for loanable 2. What effect will this change have on the interest rate? 1. 3. How will this change the behavior of consumers? Scenario 2: The government increases deficit spending by $100 Billion dollars to invest in green energy throughout the country. 1. What effect will this have on the demand for loanable funds? Increases the demand. 2. What effect will this change have on the interest rate? The interest rate will also increases because when the demand increases the interest rate also increases. 3. How willl this change the behavior of consumers?arrow_forwardRecently, the economies of North Korea and Norway have begun to grow very rapidly. This increases their citizens’ income and wealth as well. In turn, these citizens increase their savings not only in their country, but also in the United States. In this case, which of the following statements is correct? A. The supply of loanable funds decreases as savings increase. B. The supply of loanable funds increases as savings increase. C. The demand of loanable funds decreases as savings increase. D. Both supply and demand of loanable funds increase as savings increase.arrow_forward
- Recently, the economies of North Korea and Norway have begun to grow very rapidly. This increases their citizens’ income and wealth as well. In turn, these citizens increase their savings not only in their country, but also in the United States. In this case, which of the following statements is correct? A. The supply of loanable funds decreases as savings increase. B. The supply of loanable funds increases as savings increase. C. The demand of loanable funds decreases as savings increase. D. Both supply and demand of loanable funds increase as savings increase. Clear my choicearrow_forward1. What happens to the quantity of loanable funds supplied when the interest rate rises? Explain why this change happensarrow_forwardWhen does the supply of loanable funds increase? The supply of loanable funds increases when disposable income _______ or wealth _______. A. decreases; increases B. decreases; decreases C. increases; increases D. increases; decreases Thanks!arrow_forward
- If the interest rates increase this will _____ the quantity of loanable funds demanded, and if the interest rates decrease this will______it. Select one: a. increase; reduce b. increase; increase c. reduce; increase Od. reduce; reducearrow_forwardSelect the true statement or statements regarding the loanable funds market. a.The purchase of stocks and bonds is considered savings. b.Savings from households are used by firms and governments to finance investment. c.Savings refers to savings accounts held in banks only. d.Foreign entities cannot save in the United States.arrow_forwarda high interest rate can also indicate that something positive is happening in the economy. Describe how positive factors can lead to an increased in the demand for loanable funds and then an increase in the interest rate.arrow_forward
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