What are some extensions to the simplified model of the loan able funds market?
What will be an ideal response?
First, households do not lend directly to businesses. Financial institutions serve as intermediaries in the supply and demand market for loan able funds. Second, the supply of funds can change because of changes in factors that affect the thriftiness of households. Third, the demand for funds can change because of changes in the rate of return on potential investments. Fourth, households and businesses can operate on both sides of the market as both salamanders and suppliers of loan able funds. Government also participates on both sides of the loan able funds market.
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The demand for microwaves in a certain country is given by: D = 8,000-30P, where P is the price of a microwave. Supply by domestic microwave producers is: S = 4,000 + 10P. If this economy opens to trade while the world price of a microwave is $50, the domestic quantity demanded will be ________ and quantity supplied will be ________.
A. 6,500; 3,000 B. 5,000; 5,000 C. 6,000; 4,000 D. 6,500; 4,500
An unannounced increase in the money supply will increase both prices and real GDP under
A) neither rational nor adaptive expectations. B) rational but not adaptive expectations. C) adaptive but not rational expectations. D) both adaptive and rational expectations.
The amount of redistribution in the United States has increased considerably since 1968 . Over that same period, the percentage of households in poverty has _____
a. fallen b. risen c. remained constant d. fell until 1982 at which point it began rising again
A firm's ______ are costs that are incurred even if there is no output. In the short run, these costs _____ as production increases.
A. fixed costs; increase B. fixed costs; do not change C. variable costs; increase D. variable costs; do not change