Briefly explain the factors that shape the supply for loanable funds curve.
What will be an ideal response?
Student responses will vary but should accurately reflect the following information. The supply of loanable funds curve is positively sloped and is determined by the willingness of households to save and the amount of government saving (or dissaving). Households can either save or consume. The amount households consume or save depends to some extent on the interest rate. A higher real interest rate makes saving more attractive, so that the quantity of loanable funds supplied rises; a lower real interest rate makes saving less attractive, so that the quantity of loanable funds supplied falls.
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Congress created the Federal Reserve System in 1913 as the institution delegated to administer
A) monetary policy to stabilize the economy. B) the constitutional power of Congress to "coin money and regulate the value thereof." C) collect taxes for the federal government. D) the minting of coins.
The exchange of goods and services directly without money is called:
a. creative destruction. b. barter. c. arbitration. d. currency trade. e. illegal trade.
In the last 250 years the U.S. economy has succeeded in
A) relaxing the grip of scarcity and improving the quality of life. B) eradicating poverty. C) reducing the number of government regulations imposed on households and businesses. D) eliminating scarcity.
Which of the following best describes a fiscal policy tool?
A. government spending B. bank lending C. financial capital markets D. household spending