If there is shortage of loanable funds, then
a. the supply for loanable funds shifts right and the demand shifts left.
b. the supply for loanable funds shifts left and the demand shifts right.
c. neither curve shifts, but the quantity of loanable funds supplied increases and the quantity demanded decreases as the interest rate rises to equilibrium.
d. neither curve shifts, but the quantity of loanable funds supplied decreases and the quantity demanded increases as the interest rate falls to equilibrium.
c
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The fundamental limitation on public expenditures during a specific time interval is expressed by
A. the governing political party. B. the size of the tax base. C. the government budget constraint. D. no such limitation exists.
We assume that in the short run in a perfectly competitive market firms:
A. can enter and exit the market. B. can enter, but not exit the market. C. can exit, but not enter the market. D. cannot enter or exit the market.
Which of the following is a difference between the income effect and the substitution effect?
a. The income effect refers to the way a change in income alters the buying power of an individual, while the substitution effect occurs when a good becomes cheaper and people seek alternatives. b. The income effect refers to the way a change in price alters the buying power of an individual, while the substitution effect occurs when a good becomes expensive and people seek alternatives. c. The income effect refers to the way a change in price alters the buying power of an individual, while the substitution effect occurs when the opportunity cost of a good increases and people seek alternatives. d. The income effect occurs when a good becomes expensive and people seek alternatives, while the substitution effect refers to the way a change in income alters the buying power of an individual.
A self-regulating market
A. eliminates shortages or surpluses through price changes. B. can eliminate shortages quickly, but eliminates surpluses slowly. C. renders Say's law invalid. D. occurs only in labor markets.