Answer the following statements true (T) or false (F)
1. Interest represents a cost to the borrower, but an income to the lender.
2. The demand curve for loanable funds illustrates the behavior of lenders or savers.
3. The quantity of loanable funds supplied is inversely related to the interest rate.
4. A decrease in the supply of loanable funds would tend to lower the interest rate.
5. If people became thriftier and saved more, the loanable funds theory predicts that the equilibrium interest rate would decrease.
1. TRUE
2. FALSE
3. FALSE
4. FALSE
5. TRUE
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When speculators begin to sell futures contracts, suppliers will
a. try to sell more in the spot market. b. store more of their crop to sell in the future. c. not have any incentive to change their plans. d. earn larger profits.
If resources are owned by individuals instead of government,
a. resources will be used less efficiently. b. resource use will tend to be unchanging and determined by historical usage patterns. c. resource use will be guided by changing relative prices as owners attempt to maximize self-interest. d. market prices will not reflect changing values of different uses of the resources. e. none of the above answers are correct.
The price index for any designated base year must always equal
A. 100. B. 0. C. one divided by the nominal price change for the year. D. the CPI for that year.
When you withdraw $1,000 from your bank account:
A. both your and the bank's financial assets rise by $1,000. B. the bank's financial liabilities and assets fall by $1,000, and you have exchanged one financial asset for another. C. the bank's financial assets fall by $1,000 and your financial liabilities rise by $1,000. D. the bank's financial liabilities fall by $1,000 and your financial assets rise by $1,000.