The loanable funds framework is easier to use when

Info icon This preview shows pages 6–8. Sign up to view the full content.

View Full Document Right Arrow Icon
55) The loanable funds framework is easier to use when analyzing the effects of changes in _____, while the liquidity preference framework provides a simpler analysis of the effects from changes in income, the price level, and the supply of _____ A) expected inflation; bonds. B) expected inflation; money. C) government budget deficits; bonds. D) the supply of money; bonds. Answer: B 56) When comparing the loanable funds and liquidity preference frameworks of interest rate determination, which of the following are true? 47 57) A higher level of income causes the demand for money to _____ and the interest rate to _____ 58) A lower level of income causes the demand for money to _____ and the interest rate to _____ 59) A rise in the price level causes the demand for money to _____ and the demand curve to shift to the _____ A) decrease; right. B) decrease; left. C) increase; right. D) increase; left. Answer: C 60) A decline in the price level causes the demand for money to _____ and the demand curve to shift to the _____ 61) A decline in the expected inflation rate causes the demand for money to _____ and the demand curve to shift to the _____ 62) Holding everything else equal, a decrease in the money supply causes 48
Image of page 6

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Figure 4-3 63) In Figure 4-3, the factor responsible for the decline in the interest rate is A) a decline in the price level. B) a decline in income. C) an increase in the money supply. D) a decline in the expected inflation rate. Answer: C
Image of page 7
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern