Question :
10.4 Chapter Figures
The figure above shows the demand for loanable : 1240417
10.4 Chapter Figures
The figure above shows the demand for loanable funds curve.
1) In the figure above, a movement from point A to point C can be the result of
A) an increase in expected profit.
B) a decrease in expected profit.
C) a rise in the real interest rate.
D) a fall in the real interest rate.
E) an increase in the government budget deficit.
2) If the demand for loanable funds curve shifts rightward from the curve shown in the figure above, the shift could be the result of
A) an increase in expected profit.
B) a decrease in expected profit.
C) a rise in the real interest rate.
D) a fall in the real interest rate.
E) a decrease in real GDP.
The figure above shows the supply of loanable funds curve.
3) In the figure above, a movement from point A to point C can be the result of
A) a fall in expected future income.
B) an increase in disposable income.
C) a rise in the real interest rate.
D) a fall in the real interest rate.
E) an increase in wealth.
4) If the supply of loanable funds curve shifts rightward from the curve shown in the figure above, the shift could be the result of
A) a fall in expected future income.
B) a decrease in disposable income.
C) a decrease in the demand for loanable funds.
D) a decrease in the supply of loanable funds.
E) an increase in wealth.
5) If the supply of loanable funds curve shifts rightward from the curve shown in the figure above, the shift could be the result of
A) a rise in expected future income.
B) an increase in disposable income.
C) a decrease in the demand for loanable funds.
D) a decrease in the supply of loanable funds.
E) an increase in wealth.
6) If the supply of loanable funds curve shifts rightward from the curve shown in the figure above, the shift could be the result of
A) a rise in expected future income.
B) a decrease in disposable income.
C) a decrease in the demand for loanable funds.
D) a decrease in the supply of loanable funds.
E) a decrease in wealth.
10.5 Integrative Questions
1) If investment demand increases, the equilibrium real interest rate ________ and the equilibrium quantity of investment ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) does not change; does not change
2) If saving supply decreases, the equilibrium real interest rate ________ and the equilibrium quantity of investment ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) does not change; does not change
3) In the late 1990s, the U.S. federal government had a budget surplus. If there is no Ricardo-Barro effect, these surpluses ________ the supply of loanable funds and ________ the real interest rate.
A) increased; raised
B) increased; lowered
C) decreased; raised
D) decreased; lowered
E) did not change; did not change
4) In 2012, the U.S. federal government budget had a budget deficit. If there is no Ricardo-Barro effect, this deficit ________ the demand for loanable funds and ________ the real interest rate.
A) increased; raised
B) increased; lowered
C) decreased; raised
D) decreased; lowered
E) did not change; did not change
5) In the late 1990s, the U.S. federal government had a budget surplus. If there is no Ricardo-Barro effect, the budget surplus ________ the real interest rate and ________ the equilibrium quantity of investment.
A) raised; increased
B) raised; decreased
C) lowered; increased
D) lowered; decreased
E) did not change; did not change
6) In 2012, the U.S. federal government had a budget deficit. If there is no Ricardo-Barro effect, the budget deficit ________ the real interest rate and ________ the equilibrium quantity of investment.
A) raised; increased
B) raised; decreased
C) lowered; increased
D) lowered; decreased
E) did not change; did not change
7) Crowding out can occur when a government budget ________ raises the real interest rate and the equilibrium quantity of investment ________.
A) surplus; increases
B) surplus; decreases
C) deficit; increases
D) deficit; decreases
E) surplus; does not change
8) What does the Ricardo-Barro Effect predict?
A) The level of saving in a developed economy will be very low.
B) There is no way to explain animal spirits or irrational exuberance.
C) Private saving will offset the impact of government borrowing.
D) Government budget deficits crowd out private investment.
E) Net investment and gross investment will be equal.
9) If the government runs a budget deficit to fight a war and there is no Ricardo-Barro effect, what is an impact of the deficit?
A) The quantity of private saving decreases.
B) Firms purchase more capital equipment.
C) Animal spirits or irrational exuberance is created.
D) The real interest rate rises.
E) The quantity of investment increases.
