In: Economics
which of the following
statements about the loanable funds market is (are) correct?
(x) When the supply of loanable funds shifts to the right then the
equilibrium real interest rate decreases and the equilibrium
quantity of loanable funds decreases.
(y) When the demand for loanable funds shifts to the right then the
equilibrium real interest rate increases and the equilibrium
quantity of loanable funds increases.
(z) If the demand for loanable funds shifts to the right and the
supply of loanable funds shifts to the left, then the real interest
rate rises.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (y) only
Which of the following
would be consistent with a decrease in the U.S. real interest
rate?
(x) A French citizen purchases a German bond instead of the U.S.
bond they had intended to purchase.
(y) A U.S. manufacturer decides it can now afford to borrow funds
to expand its production facility.
(z) Jane, a U.S. citizen, deposits more into her savings account at
the local bank and decides against the purchase of a bond from a
Canadian business.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only
which of the following
statements is (are) correct?
(x) In the open economy macroeconomic model of the U.S. economy,
net capital outflow is equal to the quantity of U.S. dollars
supplied in the foreign exchange market.
(y) In the market for foreign currency exchange, the amount of U.S.
net capital outflow desired at each real interest rate represents
the quantity of U.S. dollars supplied for the purpose of buying
foreign assets.
(z) In the market for foreign currency exchange, the amount of U.S.
net exports desired at each real exchange rate represents the
quantity of U.S. dollars demanded for the purpose of buying U.S.
goods and services by foreign residents
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only
1. D. (y) and (z) only
(When demand increases, both i and quantity increases.)
2. B. (x) and (y) only
(With decrease in i, less US bonds will be purchased and investment
will increase.)
3. A. (x), (y) and (z)
(All the three statements are true.)