Question : 80) If technological change increases the profitability of new investment : 1388379

80) If technological change increases the profitability of new investment for firms, then the ________ curve for loanable funds will shift to the ________ and the equilibrium real interest rate will ________.

A) supply; right; fall

B) supply; left; rise

C) demand; right; rise

D) demand; left; fall

Figure 10-6

81) Refer to Figure 10-6. The loanable funds market is in equilibrium, as shown in the figure above. An increase in the supply of loanable funds could result in which of the following combinations of the real interest rate and quantity of loanable funds at a new equilibrium?

A) The real interest rate is 5 percent, and the quantity of loanable funds is $150 million.

B) The real interest rate is 5 percent, and the quantity of loanable funds is $90 million.

C) The real interest rate is 3 percent, and the quantity of loanable funds is $150 million.

D) The real interest rate is 3 percent, and the quantity of loanable funds is $90 million.

82) Refer to Figure 10-6. The loanable funds market is in equilibrium, as shown in the figure above. As a result of an increase in the government budget deficit, the ________ for loanable funds will ________, thereby ________ the equilibrium real interest rate and ________ the equilibrium quantity of loanable funds.

A) demand; rise; increasing; decreasing

B) supply; rise; decreasing; increasing

C) demand; fall; decreasing; decreasing

D) supply; fall; increasing; decreasing

83) Refer to Figure 10-6. The loanable funds market is given in the figure above. If the current real interest rate is 5 percent, which of the following is true?

A) The loanable funds market is in equilibrium.

B) There is a surplus of loanable funds in the market.

C) There is a shortage of loanable funds in the market.

D) The quantity of loanable funds being demanded in the market is less than $90 million.

84) Refer to Figure 10-6. The market is in equilibrium. If the government budget deficit rises, which of the following would you expect to see?

A) The quantity of loanable funds demanded by firms will rise above $120 million.

B) The quantity of loanable funds demanded by firms will fall below $120 million.

C) The budget deficit will have no impact on the quantity of loanable funds demanded by firms.

D) The interest rate will fall below 4 percent.

85) An increase in the government budget deficit will shift the ________ curve for loanable funds to the ________ and the equilibrium real interest rate will ________.

A) supply; right; fall

B) supply; left; rise

C) demand; right; rise

D) demand; left; fall

86) An increase in the government budget surplus will shift the ________ curve for loanable funds to the ________ and the equilibrium real interest rate will ________.

A) supply; right; fall

B) supply; left; rise

C) demand; right; rise

D) demand; left; fall

87) Which of the following will increase the real interest rate?

A) an increase in the supply of loanable funds

B) an increase in household saving

C) an increase in the demand for loanable funds

D) an increase in the budget surplus

88) What is the main difference between a consumption tax and an income tax?

A) A consumption tax requires households to pay taxes only on the income they have left after consumption, while an income tax requires households pay taxes on all earned income before consumption.

B) A consumption tax requires households to pay taxes only on the income they spend, while an income tax requires households pay taxes on all earned income.

C) A consumption tax always generates less revenue than an income tax.

D) There is no difference between a consumption tax and an income tax.

89) Which of the following would occur if the United States switched from income taxes to consumption taxes?

A) Consumption would increase.

B) The supply of loanable funds would decrease.

C) Saving would increase.

D) Tax revenues would rise.