"In the loanable funds market, when there is a shortage of funds, the real interest rate will increase." Explain whether the previous statement is correct or not
What will be an ideal response?
The statement is correct. The shortage of loanable funds means that there are firms attempting to obtain loans who cannot do so. As a result, the real interest rate will rise until equilibrium is attained.
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The natural rate hypothesis concludes that the inflation rate increases, then in the short run there is
A) a downward movement along the short-run Phillips curve. B) an upward movement along the short-run Phillips curve. C) no change at all in the short-run Phillips curve. D) an upward shift of the short-run Phillips curve. E) a downward shift of the short-run Phillips curve.
In the above figure, using the slope across an arc, the slope of the curve between points a and b is
A) 1/2. B) -1/2. C) 2. D) -2.
Entry into a market by new firms will increase the
a. supply of the good. b. profits of existing firms. c. price of the good. d. marginal cost of producing the good.
The improved health of a nation can increase:
A. economic growth and malnutrition among children. B. productivity of workers and fiscal policy spending. C. the productivity of workers and economic development. D. economic development and illiteracy.