In the loanable funds market, what variable changes to eliminate a shortage of loanable funds and how is the shortage eliminated?
What will be an ideal response?
The real interest rate changes to eliminate the shortage of loanable funds. A shortage of loanable funds means that businesses and others want to borrow more than households and others are willing to loan so that the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied. This shortage means that some businesses are willing to pay a higher interest rate. The real interest rate rises, and as it does so, the quantity of loanable funds demanded decreases and the quantity of loanable funds supplied increases. Both changes help eliminate the shortage of loanable funds and so the real interest rate rises until it reaches its equilibrium value.
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What does it mean when one currency is "pegged" against another currency?
What will be an ideal response?
Monetizing the debt is undesirable given its impact on ________
A) investment B) nominal income C) tariff rates D) prices
If equal amounts of a variable input are sequentially added to the fixed input in a typical production function,
A. the additions to output will be constant. B. increments to output will increase indefinitely. C. the increments to output will decrease first and then increase. D. increments to output will first increase at an increasing rate and then at a decreasing rate.
A bank increased its fees for processing personal checks from 18 cents to 24 cents per check. In a statement accompanying the announcement, the bank said that some customers who reduce the number of checks they write would see no change in their overall account fee. What is the implication of this statement for these customers?
a. The price elasticity of demand for check writing is less than one. b. The price elasticity of demand for check writing is greater than one. c. They are indifferent to the check writing fee. d. They have a unit-elastic demand for check writing.