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chapter2_practice_problem

# chapter2_practice_problem - Chapter 2 practice problems 1...

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Chapter 2 practice problems: 1. At any given point in time, households would demand a _______ quantity of loanable funds at ________ rates of interest. A) greater; higher B) greater; lower C) smaller; lower D) none of the above 2. If interest rates are ______ , ______ projects will have positive NPVs. A) higher; more B) lower; more C) lower; no D) none of the above 3. If economic conditions become less favorable A) expected cash flows on various projects will increase. B) more proposed projects will have expected returns greater than the hurdle rate. C) there would be additional acceptable business projects. D) there would be a decreased demand by business for loanable funds. 4. As a result of more favorable economic conditions, there is a(n) __________ demand for loanable funds, causing an _________ shift in the demand curve. A) decreased; inward B) decreased; outward C) increased; outward D) increased; inward 5. The federal government demand for loanable funds is __________. If the budget deficit was expected to increase, the federal government demand for loanable funds would ________. A) interest elastic; decrease B) interest elastic; increase C) interest inelastic; increase D) interest inelastic; decrease 6. For a given set of foreign interest rates, the quantity of U.S. loanable funds demanded by foreign governments or firms will be _________________ U.S. interest rates. A) positively related to

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chapter2_practice_problem - Chapter 2 practice problems 1...

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