Incentives for borrowers and savers in the loanable funds market are determined by the nominal interest rate as opposed to the real interest rate.
a. True
b. False
Indicate whether the statement is true or false
Question 2Consider a demand curve for peaches. Which of the following movements will be observed if the price of peaches decline at a point in time?
a. The demand curve will rotate inward at the given price level.
b. The will be a movement up along the demand curve.
c. The demand curve will rotate outward at the given price level.
d. There will be a downward movement along the demand curve.
e. The demand curve will become steeper.
Question 3A straight line production possibilities curve implies increasing opportunity costs.
a. True
b. False
Indicate whether the statement is true or false
Question 4A decrease in real interest rates will lead to an increase in the demand for loanable funds.
a. True
b. False
Indicate whether the statement is true or false
Question 5The demand curve of a commodity slopes downward because of:
a. the insatiable nature of human wants.
b. the presence of double coincidence of wants.
c. the law of demand.
d. the scarcity of goods and services in an economy.
e. the law of diminishing marginal utility.
Question 6Capital accumulation causes the production possibilities curve to shift inward over time.
a. True
b. False
Indicate whether the statement is true or false
Question 7An increase in real interest rates will lead to an increase in the quantity of loanable funds supplied.
a. True
b. False
Indicate whether the statement is true or false
Question 8The downward slope of the demand curve is attributed to:
a. the inverse relationship between price and quantity demanded.
b. the direct relationship between income and quantity demanded.
c. the direct relationship between price and quantity demanded.
d. the inverse relationship between income and quantity demanded.
e. the direct relationship between consumer preferences and quantity demanded.
Question 9Other things being constant, an economy must give up some consumer goods and services today to produce more capital goods in order to grow.
a. True
b. False
Indicate whether the statement is true or false
Question 10Crowding out will lead to a decrease in supply of loanable funds, a decrease in real interest rates, and subsequently a decrease in spending by households and firms.
a. True
b. False
Indicate whether the statement is true or false
Question 11Which of the following determines the quantity demanded of a commodity?
a. The income levels of consumers
b. The price of the commodity
c. The prices of related commodities
d. The number of buyers
e. Consumers' expectations
Question 12An increase in an economy's capital stock increases its future productive capacity.
a. True
b. False
Indicate whether the statement is true or false
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