Ignoring the Ricardo-Barro effect, what impact does the government have in the loanable funds market?
What will be an ideal response?
The government has two effects in the market for loanable funds. First, if the government has a budget surplus, it adds to private saving and increases the supply of loanable funds. Second, if a government has a budget deficit, it increases the demand for loanable funds.
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Which of the following is NOT an example of a negative externality?
A) inoculation against disease B) pollution C) playing a boom box loudly in a crowded park D) rush hour traffic
Given that the own-price elasticity of demand for shoes is -2.6, if the price of shoes rises by 8%, what will happen to the quantity of shoes demanded?
a. It will decrease by 20.8% b. It will increase by 20.8% c. It will decrease by 2.6% d. It will decrease by 2.6%
Brandon, an economist, is a believer of the rational expectations school. According to him, which of the following is likely to affect the levels of output and employment in an economy?
a. An expansionary monetary policy, if it is fully anticipated b. A recessionary monetary policy, if it is fully anticipated c. A monetary policy that is unanticipated d. A fiscal policy that is anticipated e. The Fed's announcement of no change in monetary policy
Economic growth is measured by the percentage change in: a. potential nominal GDP
b. structural unemployment. c. the rule of 72. d. potential real GDP (LRAS).