chapter_11_-_loanble_funds_theory

chapter_11_-_loanble_funds_theory - Page 1 of 25 Test Bank...

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Unformatted text preview: Page 1 of 25 Test Bank Macroeconomics: Theory and Policy Chapter 11: Loanable Funds Theory B. Modjtahedi Question 1 Which of the following statements is most accurate? A. Demand for and supply of loanable funds are both flow variables. B. Demand for loanable funds is a flow variable, but the supply is a stock variable. C. Demand for loanable funds is a stock variable, but the supply is a flow variable. D. Demand for and supply of loanable funds are both stock variables. E. None of the above. Question 2 Which of the following statements is most accurate? A. Demand for and supply of money are both flow variables. B. Demand for money is a flow variable, but the supply is a stock variable. C. Demand for money is a stock variable, but the supply is a flow variable. D. Demand for and supply of money are both stock variables. E. None of the above. Question 3 Which of the following statements is most accurate? A. If, all else the same, the nominal interest rate increases, the quantity of loanable funds supplied will increase. B. If, all else the same, the nominal interest rate increases, the quantity of loanable funds supplied will decrease. C. If, all else the same, the nominal interest rate decreases, the quantity of loanable funds supplied will increase. D. If, all else the same, the nominal interest rate increases, demand for money will increase. E. None of the above. Question 4 Which of the following statements is most accurate? A. If, all else the same, the nominal interest rate increases, the quantity of loanable funds demanded will increase. B. If, all else the same, the nominal interest rate increases, the quantity of loanable funds demanded will decrease. C. If, all else the same, the nominal interest rate decreases, the quantity of loanable funds demanded will decrease. D. If, all else the same, the nominal interest rate decreases, demand for money will decrease. E. None of the above. Page 2 of 25 Hypothetical Loanable Funds Market Interest rate Amount of Loanable Funds Demanded Amount of Loanable Funds Supplied 20% 16% 12% 8% 4% $2,000 $2,200 $2,400 $2,600 $2,800 $2,800 $2,600 $2,400 $2,200 $2,000 Question 5 Consider the hypothetical loanable funds market shown in the table above. What is the equilibrium interest rate? A. 4% B. 8% C. 12% D. 16% E. None of the above. Question 6 Consider the hypothetical loanable funds market shown in the table above. Suppose that currently the market participants expect the inflation rate for the next year to be 4%. What is their ex-ante real interest rate? A. 4% B. 8% C. 12% D. 16% E. None of the above. Question 7 Consider the hypothetical loanable funds market shown in the table above. Suppose that currently the ex-ante real interest rate is 8%. What is the expected inflation rate?...
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chapter_11_-_loanble_funds_theory - Page 1 of 25 Test Bank...

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