Answer the following statements true (T) or false (F)
1. If the expected rates of return on investments increase, the loanable funds theory predicts that the equilibrium interest rate would decrease.
2. An increase in the expected rates of return on investments would most likely increase the
supply of loanable funds.
3. Other things equal, short-term loans usually have lower rates of interest than do long-term loans.
4. For a given future value, the higher is the interest rate, the higher will be the present value.
5. In time-value of money calculations, discounting is the reverse of compounding.
1. FALSE
2. FALSE
3. TRUE
4. FALSE
5. TRUE
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Answer the next question using data in the following tables showing production possibilities for units of food and clothing for two regions, East and West, of a hypothetical world.East Production PossibilitiesWest Production Possibilities ABCD ABCDFood241680Food4530150Clothing04812Clothing051015The mutually beneficial terms of trade will be
A. between 2 and 3 units of food for 1 unit of clothing. B. less than 2 units of food for 1 unit of clothing. C. greater than 4 units of food for 1 unit of clothing. D. between 4 and 5 units of food for 1 unit of clothing.
The curve that shows the relationship between net exports and the real exchange rate is:
A) upward sloping. B) horizontal. C) downward sloping. D) vertical.
A market is not a pure monopoly if firms
A. can enter it freely. B. sell unique products. C. can exit the market freely. D. require government permission to sell in the market.
The number of labor union members reached its peak in the decade of the
A. 1950s. B. 1960s. C. 1970s. D. 1980s.