Question

Which of the following is related to (or occurs during) crowding out?

Question 5 options:

	reduction in private sector investment
	increased total loans
	increase in the supply of loanable funds
	lower real interest rates
	higher real interest rates
	government deficits
	decreased total loans

Question 6 (1 point)

When the supply of loanable funds increases, the result is an increase in the real interest rates and a decrease in the number of loans granted.

Question 6 options:

	True
	False

Question 7 (1 point)

When the demand for loanable funds increases, the result is an increase in both the real interest rate and the quantity of loans made.

Question 7 options:

	True
	False

Question 8 (1 point)

Which of the following would cause the Supply of Loanable funds to shift left (decrease)?

Question 8 options:

	Higher real interest rates
	New tax policies that remove the tax benefits associated with saving in retirement plans.
	A wide spread belief that we are headed into a recession.
	All of the above.

Question 9 (1 point)

Match the function of money with its definition.

Things are priced so that you can compare relative prices. Widely accepted in the trade for goods and services. People will accept it over time, even after you make a purchase today. Retains its worth over time.

1. Medium of Exchange 2. Store of Value 3. Unit of Account 4. Deferred Payment

Answer 1

Question -5

Answer : reduction in private sector investment related to crowding out related to crowding out effect . In crowding out effect there is increment in public sector investment and reduction in private sector investment .

Question- 6

Answer : As supply of loanable fund increases than supply that is saving curve shifted toward right and interest rate will decreases this will leads increase in loan being granted . so the statement is false .

Question -7

Answer : if demand for lonable fund increases than demand curve shifted towards right and real interest rate increases this will decreases the investment , this concept is called crowding out effect because government attempt to deficit spend  to speed up the economy , they will crowding out consumers and investors by increasing interest rate . As real interest rate increases than loan granted will decreases .

so the statement is false .

Question - 8

Answer : All of the above is the correct answer because as supply curve shifted toward left than real interest rate will increase , if people save less than also supply curve will shifted towards left . expectation about future recession also decreases supply . so the answer will be all of the above .

Question - 9

Answer :   

Things are priced so that you can compare relative prices	unit of account
Widely accepted in the trade for goods and services	Medium of exchange
people will accept it over time , even after you make a purchase today	Deferred payment
Retain its worth overtime	store of value