As the interest rate increases, _____
a. the demand for loanable funds increases
b. the demand for loanable funds decreases
c. the quantity demanded of loanable funds increases
d. the quantity demanded of loanable funds decreases
d
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Sam has $500 in traveler's checks. He cashes a $100 traveler check, deposits $150 into his checking account at a Savings and Loan Association, and deposits the remaining $250 into a savings account at a credit union. Immediately, ________
A) M1 decreases by $250 and M2 does not change B) M1 decreases by $400 and M2 increases by $250 C) M1 does not change and M2 increases by $250 D) M1 and M2 do not change
Consider a consumer who purchases two goods, X and Y. If the price of good Y falls, then the substitution effect by itself will
a. cause the consumer to buy more of good Y and less of good X. b. cause the consumer to buy more of good X and less of good Y. c. not affect the amount of goods X and Y that the consumer buys. d. result in an upward-sloping demand for good Y if the substitution effect is positive.
Suppose the average interest rate on euro bonds is 4%, and the average interest rate on U.S. dollar bonds is 6%. Which should the investor choose?
a. neither-bonds have high default rates. b. both-an investor will choose some euro bonds and some U.S. bonds to diversify. c. the euro bond because their economies are usually more stable. d. It is not possible to answer without information on exchange rates.
Suppose 10 percent of the families receive 10 percent of the income, 20 percent of the families receive 20 percent of the income, and so forth. The Lorenz curve would be
A) a straight line at a 45-degree angle from the origin. B) a straight line at a 30-degree angle from the origin. C) the most bowed curve possible. D) the horizontal axis.