Question

Microecon quiz

If the interest rate increases, then

Select one:

a. households will decrease their level of saving.

b. the supply of loanable funds will fall because it now costs more to borrow funds and people who were supplying the funds will realize that fewer people will be willing to borrow their funds.

c. households will consume less and save more.

d. government will consume more because it now costs more to borrow funds to buy goods.

e. a, b, and d

Which of the following statements is true?

Select one:

a. Ceteris paribus, the longer the term of a loan, the lower the interest rate.

b. The nominal interest rate is the interest rate adjusted for expected inflation.

c. Loans that cost more to process and administer will come with higher interest rates than loans that cost less to process.

d. a and b

e. none of the above

The interest rate on a loan will be lower,

Select one:

a. the shorter the term of the loan.

b. the less risk associated with the loan.

c. the lower the processing costs of the loan.

d. the lower the administrative costs of the loan.

e. all of the above

Which of the following statements is true?

Select one:

a. The real interest rate matters more to borrowers than the nominal interest rate.

b. The nominal interest rate is equal to the real interest rate minus the expected inflation rate.

c. If there is expected deflation (expected decline in the price level), instead of expected inflation, the nominal interest rate will be greater than the real interest rate.

d. The nominal interest rate is determined by the demand for credit and the supply of credit, or by the demand for loanable funds and the supply of loanable funds.

e. If there is expected deflation, the nominal interest rate will necessarily be negative.

The terms interest and interest rate are synonyms.

Select one:

True

False

As the interest rate rises, the opportunity cost of

Select one:

a. future consumption rises.

b. present consumption rises.

c. investing in roundabout methods of production rises.

d. lending money rises.

Answer 1