Biology Forums - Study Force

When the supply of real loanable funds is upward-sloping and the demand for real loanable funds rises, complete crowding-out:
 a. Occurs because private demand falls by the same amount that government borrowing rises.
  b. Does not occur because taxes rise with the increase in real GDP.
  c. Does not occur because new funds are supplied to the Real Loanable Funds Market as the real, risk-free interest rate rises.
  d. Occurs because private borrowers will increase the amount their loans as the real risk-free interest rate rises.

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Question 2 - At what stage of the securitization process was moral hazard a major problem?
 a. Securitization.
  b. Rating securitized issues.
  c. Insuring securitized issues
  d. All of the above

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Question 3 - One reason government deficits do not cause complete crowding out is because:
 a. Saving increases by the amount that consumption falls when income changes.
  b. When the real risk-free interest rate rises, the real money supply rises due to changes in the public's preferred asset ratios (e.g., Cc/D, N/D, and U/D).
  c. As the real risk-free interest rate rises, government spending automatically rises to pay for the higher interest expenses.
  d. All the above.
  e. None of the above.

[ 1 ]  .C

[ 2 ]  .D

[ 3 ]  .B

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