S0. If inderest rates rise but the quantity of hoanable funds demanded and suppl
ID: 1132378 • Letter: S
Question
S0. If inderest rates rise but the quantity of hoanable funds demanded and supplied remains constat, implies that a the demand for loanable funds increased while the supply decreased both the demand and the supply of loan ble frds de reased. d the demand for loanable funds decreased while the supely increased e, the demand and the supply of loanable funds both remained 51. If the economy begins to fall into a recession, one would expect Congress and the president to conduct h countercyclical monetary ractionay a coetractionary fiscal d expansionary monetary e expansionary fiscal 52. When U.S, housing peices declined prior to and during the Great Recession, it caused aggregate demand to decrease because a the govermment raised imerest rates to prevent inflation. b househoild wealth decreased, casing a decline in conaumer spending. e. the U.S. population and labor fonce declined abruptly d. the government raised taxes and decreased spending. e the govenment refiused to allow the money supply so increase. 53. To avoid double counting when calculating gress domestic product (GDPL, i is best to count a. used goods b. stocks and bonds. c. the value of goods and services produced at every stage of production d the value added at each stage of production. e. all goods and services purchased by consumers, firms, and the government 54. The slope of the short-run aggregate supply curve can be explained by a· the fact that all prices are flexible in the short run. b. the fact that all prices except wages are flexible in the short run. c. the fact that all prices are sticky in the short run. d sticky input prices and flexible output prices e. flexible input prices and sticky output prices 55. If Jaqueline's disposable income increases from $1,300 to S1,300 and her level of saving increases from S200 to $400, then her marginal propensity to: a consume is 04 b. save is 0.6 c. consume is 0.6 d save is 0.8 e. consume is 0.2 When the government borrows, the so " which causes private investment to a. demand for; rise; rise b. demand for; rise; fall c. supply oßf fall; rise 56. loanable funds shifts to the right, causing the interest rate d. supply of; rise; fall e demand for; fall; rise Page 10 /11Explanation / Answer
50. D.) The demand for loanable funds decreased while the supply increased.
Interest rate and demand for loanable funds are inversely related.if interest rate rise then the quantity of funds demanded will decrease.
51. C.) Contractionary Monetary Policy
Contractionary Monetary Policy will increase interest rates, decrease consumption, production, investment, net exports, and aggregate demand.
52. B.) Household wealth decreased, causing a decline in consumer spending.
The government raised taxes at the beginning of the Great Depression, it caused aggregate demand to decrease because: household disposable income decreased, causing consumer spending to decrease.
53. C.) The value of goods and services produced at every stage of production.
Double Counting is perfectly solved by value added method. By this, instead of taking value of final products, value added by each firm at each stage of production is included.This is better than final product approach.
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