What are the various sources of demand and supply in the market for loanable funds?
The supply of loanable funds comes from anyone who has saved money and wants to lend it out. For example, if a household wants to save its money in the bond market, it would purchase bonds in the market or perhaps from a particular firm.
The demand for loanable funds comes from households and firms who want to borrow money. This might include people who want to borrow to buy a house or condo. Businesses borrow money to buy equipment or to build or renovate factories and office space. In each case, investment is the source of the demand for loanable funds.
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An anticipated change in the money supply will result in a(n) __________ level of economic activity and a __________ price level
A) increased; higher B) decreased; higher C) unchanged; lower D) unchanged; higher
As interest rates fall,
A) the values of bonds rise. B) the values of bonds fall. C) the values of bonds are unchanged. D) the value of perpetuities are unchanged, but the value of other bonds change in value. E) the value of all bonds except perpetuities change.
One reason why the smaller oligopolistic firms accept godfather pricing in unbalanced oligopoly is because they can
a. differentiate their products more fully in order to increase market power b. engage in mergers if the godfather chooses the wrong price c. together influence the price leader (godfather firm) to share industry profit more equally d. enjoy a higher economic profit than they would otherwise e. survive a price war without too many losses
A firm is considering three projects. Each costs $1 million now. Project A will yield $400,000 a year for three years, beginning one year from now. Project B will yield $1.25 million three years from now, and Project C will yield $600,000 for two years,
beginning two years from now. If the interest rate is 8 percent, which of these projects should the firm undertake? A) Project A B) Project B C) Project C D) none of these