Which of the following borrowers' demand for funds is least sensitive to interest rates? a. b. c. d.

households business government foreign corporations

status: not answered () correct: c your answer: 2

Which of the following would not result in an outward shift in the demand for loan able funds? a. b. c. d. Decrease in taxes. Increase in federal budget deficit. Economic expansion. Increase in personal income.

status: not answered () correct: d your answer: 3

Which of the following is the largest provider of loan able funds? a. b. c. d. households businesses Federal Government Federal Reserve

status: not answered () correct: b your answer: 4

Which of the following is most likely to result in lower interest rates? a. b. c. d. Economic recession. Increase in inflation. Increases in the federal budget deficit. All of the answers are correct.

status: not answered () correct: a your answer: 5

Nominal interest rates are 8% and inflation is expected to be 5%. What is the real rate of interest? a. b. c. d. 0.4% 3% 8% 13%

status: not answered () correct: b your answer: 6

Which of the following describes the effects of "crowding-out"? a. b. c. d. Business demand for funds limits household access due to higher credit. Government demand for funds forces interest rates higher limiting access to businesses. Household supply of funds limits government access during recessions. Foreign investors accept lower returns than households.

status: not answered () correct: b your answer: 7

Nominal interest rates compensate suppliers of funds for: a. b. c. d. delaying consumption. expected inflation. taxes due. both a and b.

status: not answered () correct: d your answer: 8

What are the likely effects of an economic expansion? a. b. c. d. increases in funds demanded decreases in funds demanded decreases in supplied funds lower interest rates

status: not answered () correct: a your answer: 9

Which of the following did NOT lead to lower interest rates following September 11, 2001? a. b. c. d. Decreased business demand for funds. Reduced spending by households. Increased federal spending on the military. Increase in money supply by the Federal Reserve.

status: not answered () correct: c your answer: 10

What is the most likely effect of an increase in personal taxes? a. b. c. d. Decreased supply of loanable funds. Decrease in interest rates. Increase in business demand. All of the above are likely effects of an increase in personal taxes.

status: not answered () correct: a your answer: 11

Inflation causes the supply curve of loanable funds to shift to the ________ and the demand curve to shift to the ________. a. b. c. d. left; right left; left right; right right; left

status: not answered () correct: a your answer: 12

An investor wants to buy 3% more goods and services next year. Prices are expected to rise by 2%. Which of the following is true? a. b. c. d. The investor requires a 1% real rate of interest. The investor requires a 2% nominal interest rate. The investor requires a 5% nominal interest rate. The investor requires a 5% real rate of interest.

status: not answered () correct: a your answer: 13

Which of the following is true?

I. When the supply of loan able funds exceeds the demand, interest rates fall. II. When the demand of loan able funds exceeds supply, interest rates fall.

a. b. c. d.

I only II only I and II neither I or II

status: not answered () correct: a your answer: 14

Which of the following borrowers is LEAST sensitive to interest rates? a. b. c. d. foreign borrowers Federal Government households businesses

status: not answered () correct: b your answer: 15

The ________ is the net return to a lender that is earned after adjusting for the effects of inflation. a. b. c. d. adjusted interest rate raw rate fisher rate real interest rate

status: not answered ()

correct: b your answer: 16

The demand for loan able funds increases as interest rates decline. True False status: not answered () correct: true your answer: 17

The supply of loan able funds increases as interest rates decline. True False status: not answered () correct: false your answer: 18

The federal government demand for funds is interest inelastic. True False status: not answered () correct: true

your answer: 19

Households are net suppliers of loan able funds, while governments are net demanders of funds. True False status: not answered () correct: true your answer: 20

The quantity of loan able funds supplied is more sensitive to interest rates than the quantity of demanded funds. True False status: not answered () correct: false your answer: 21

When supplied funds exceed the amount of funds demanded, interest rates increase. True False status: not answered () correct: false your answer:

22

The real interest rate is the increase in purchasing power earned when delaying current consumption. True False status: not answered () correct: true your answer: 23

The crowding-out effect was a significant issue in lowering interest rates during the late 1990's. True False status: not answered () correct: false your answer: 24

Expected declines in the value of the dollar reduce the supply of funds provided by foreign investors. True False status: not answered () correct: true your answer: 25

When businesses demand more loan able funds than they supply, interest rates increase. True False status: not answered () correct: false your answer: 26

High levels of inflation in the late 1970s led to higher interest rates. True False status: not answered () correct: true your answer: 27

For businesses, the NPV of projects increases when interest rates decline. True False status: not answered () correct: true your answer: 28

Foreign demand for funds will increase as U.S. interest rates increase. True False status: not answered () correct: false your answer: 29

The equilibrium interest rate is where the supply of loan able funds equals the demand for loan able funds. True False status: not answered () correct: true your answer: 30

After the attack on the U.S. on September 11, 2001, interest rates increased dramatically. True False status: not answered () correct: false your answer: