Explain how a market demand curve is constructed.
What will be an ideal response?
The market demand curve is the horizontal summation of the individual demand curves. A price is selected, and the quantities demanded of each person at that price are summed. Then another price is selected and the quantities demanded of each person at that price are summed. Continue doing this for other prices until the market demand curve is traced out.
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When the expected profit ________, investment demand ________ and the demand for loanable funds curve shifts ________
A) falls; decreases; leftward B) rises; increases; leftward C) falls; decreases; rightward D) falls; increases; rightward E) rises; decreases; rightward
Effective usury laws cause:
A. a surplus in the market for loanable funds. B. the quantity of loanable funds demanded to be brought into balance with the quantity supplied. C. the quantity of loanable funds demanded to exceed the quantity supplied. D. the quantity of loanable funds supplied to exceed the quantity demanded.
Quotas and tariffs provide the same outcome: restriction of international trade and higher prices for consumers.
Answer the following statement true (T) or false (F)
For any given financial asset, risk levels and average expected rates of return are:
A. independent of each other. B. negatively related because assets with higher average expected rates of return sell for higher prices, which are inversely related to risk. C. positively related because both are inversely related to the rate of inflation. D. positively related because investors must be compensated for taking greater risks.