Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
54) If the disposable income decreases, then
A) the supply of loanable funds increases.
B) the supply of loanable funds decreases.
C) the quantity of loanable funds demanded increases.
D) the quantity of loanable funds supplied decreases.
E) the demand for loanable funds increases.
Skill: Level 1: Deinition
Section: Checkpoint 10.2
Status: Old
AACSB: Relective thinking
55) If expectations about future income change, there is
A) no change in saving until income actually changes.
B) a decrease in saving if people expect income to increase in the future.
C) an increase in saving if people expect income to increase in the future.
D) a decrease saving if people expect income to decrease in the future.
E) a change in the quantity of loanable funds supplied and a movement along the supply of
loanable funds curve.
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Relective thinking
56) If expected future income increases, then
A) the supply of loanable funds increases.
B) the supply of loanable funds decreases.
C) the quantity of loanable funds demanded increases.
D) the quantity of loanable funds supplied decreases.
E) the demand for loanable funds decreases.
Skill: Level 1: Deinition
Section: Checkpoint 10.2
Status: Old
AACSB: Relective thinking
41
57) In 2008 the fall in the value of the stock market decreased people's wealth. As a result
of this change alone, the supply of loanable funds
A) increased.
B) did not change, and there was no movement along the supply of loanable funds curve.
C) decreased.
D) did not change, and there was an upward movement along the supply of loanable funds
curve.
E) did not change, and there was a downward movement along the supply of loanable funds
curve.
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Relective thinking
58) When ________ changes, the supply of loanable funds curve shifts.
A) the expected rate of proit
B) people's expected future income
C) the price level
D) "animal spirits"
E) investment
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Relective thinking
59) Which of the following factors changes saving supply and hence shifts the supply of
loanable funds curve?
i. disposable income
ii. wealth
iii. expected proit
A) i only
B) ii only
C) iii only
D) i and ii
E) i, ii, and iii
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Relective thinking
42
60) Which of the following shifts the supply of loanable funds curve?
A) change in the real interest rate
B) change in investment demand
C) change in disposable income
D) change in expected proit
E) change in "animal spirits"
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Relective thinking
61) A fall in the real interest rate brings a
A) movement up along the supply of loanable funds curve.
B) rightward shift of the supply of loanable funds curve.
C) movement down along the supply of loanable funds curve.
D) leftward shift of the supply of loanable funds curve.
E) rightward shift of the demand for loanable funds curve.
Skill: Level 1: Deinition
Section: Checkpoint 10.2
Status: Old
AACSB: Relective thinking
62) If the real interest rate rises, then the
A) supply of saving increases and the supply of loanable funds curve shifts rightward.
B) supply of saving decreases and the supply of loanable funds curve shifts leftward.
C) quantity of saving increases and there is a movement up along the supply of loanable
funds curve.
D) quantity of saving decreases and there is a movement down along the supply of loanable
funds curve.
E) demand for investment decreases and the demand for loanable funds curve shifts
leftward.
Skill: Level 1: Deinition
Section: Checkpoint 10.2
Status: Old
AACSB: Analytical thinking
43
63) If the real interest rate
A) rises, the supply of loanable funds curve shifts rightward.
B) rises, the supply of loanable funds curve shifts leftward.
C) falls, there is a movement along the supply of loanable funds curve to a higher quantity
of saving.
D) falls, there is a movement along the supply curve of loanable funds to a lower quantity of
loanable funds .
E) falls, the supply of loanable funds curve shifts leftward.
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Analytical thinking
64) The supply of loanable funds curve has a positive slope because the
A) higher the real interest rate, the lower the return to saving.
B) average return in the stock market is directly related to the real interest rate.
C) lower the real interest rate, the higher the return to saving.
D) lower the real interest rate, the lower the return to saving.
E) quantity of investment increases when the real interest rate increases.
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Relective thinking
65) If wealth ________, then saving increases, which is shown by a ________.
A) increases; movement upward along the supply of loanable funds curve
B) decreases; movement downward along the supply of loanable funds curve
C) increases; rightward shift of the supply of loanable funds curve
D) decreases; rightward shift of the supply of loanable funds curve
E) increases; leftward shift of the supply of loanable funds curve
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Analytical thinking
44
66) Which of the following factors does NOT shift the supply of loanable funds curve?
i. change in disposable income
ii. change in wealth
iii. change in expected proit
A) i only
B) ii only
C) iii only
D) i and ii
E) ii and iii
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Relective thinking
67) The supply of loanable funds curve has a ________ slope and the demand for loanable
funds curve has a ________ slope.
A) positive; positive
B) positive; negative
C) negative; positive
D) negative; negative
E) vertical; horizontal
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Relective thinking
68) In which of the following cases would the supply of loanable funds curve shift
rightward?
A) Joe is worried about cutbacks at his irm, so his expected future income falls.
B) In June, Sally learns that at year's end she will receive a bonus that will double her
current salary.
C) The stock market booms, so people's wealth increases.
D) The economy moves into a recession.
E) Investment demand increases.
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Relective thinking
45
69) A decrease in households' disposable income ________ saving supply, and the supply of
loanable funds curve ________.
A) decreases; shifts rightward
B) decreases; shifts leftward
C) increases; shifts rightward
D) increases; shifts leftward
E) does not change; does not shift
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Analytical thinking
70) An increase in disposable income leads to a
A) leftward shift of the demand for loanable funds curve.
B) downward movement along the supply of loanable funds curve.
C) rightward shift of the supply of loanable funds curve.
D) leftward shift of the supply of loanable funds curve.
E) rightward shift of the demand for loanable funds curve.
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Analytical thinking
71) A decrease in wealth leads to a
A) leftward shift of the demand for loanable funds curve.
B) downward movement along the supply of loanable funds curve.
C) rightward shift of the supply of loanable funds curve.
D) leftward shift of the supply of loanable funds curve.
E) rightward shift of the demand for loanable funds curve.
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Analytical thinking
46
72) An increase in wealth ________ saving supply, and the supply of loanable funds curve
________.
A) decreases; shifts rightward
B) decreases; shifts leftward
C) increases; shifts rightward
D) increases; shifts leftward
E) does not change; does not shift
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Analytical thinking
73) When wealth ________, saving supply ________, and the supply of loanable funds curve
shifts ________.
A) decreases; decreases; leftward
B) increases; increases; leftward
C) decreases; decreases; rightward
D) increases; decreases; leftward
E) increases; increases; rightward
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Analytical thinking
74) An increase in people's expected future disposable income ________ saving supply, and
the supply of loanable funds curve ________.
A) decreases; shifts rightward
B) decreases; shifts leftward
C) increases; shifts rightward
D) increases; shifts leftward
E) does not change; does not shift
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Analytical thinking
47
75) A decrease in expected future income leads to a
A) rightward shift of the demand for loanable funds curve.
B) downward movement along the supply of loanable funds curve.
C) rightward shift of the supply of loanable funds curve.
D) leftward shift of the supply of loanable funds curve.
E) leftward shift of the demand for loanable funds curve.
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Analytical thinking
76) Suppose that the initial supply of loanable funds curve is SLF1. In the igure above, an
increase in the real interest rate leads to
i. a shift in the supply of loanable funds curve from SLF1 to SLF2.
ii. a shift in the supply of loanable funds curve from SLF1 to SLF3.
iii. a movement along the supply of loanable funds curve SLF1.
iv. no change whatever.
A) i only
B) ii only
C) iii only
D) i and iii
E) iv only
Skill: Level 3: Using models
Section: Checkpoint 10.2
Status: Old
AACSB: Analytical thinking
48
77) In the igure above, the shift in the supply of loanable funds curve from SLF1 to SLF2
could be the result of
A) an increase in the real interest rate.
B) a decrease in disposable income.
C) an increase in expected rate of proit.
D) a decrease in wealth
E) an increase in expected future disposable income.
Skill: Level 3: Using models
Section: Checkpoint 10.2
Status: Old
AACSB: Analytical thinking
78) In the loanable funds market, a shortage of loanable funds occurs when the
A) demand for loanable funds exceeds supply of loanable funds.
B) supply of loanable funds exceeds demand for loanable funds.
C) quantity of loanable funds supplied exceeds the quantity of loanable funds demanded.
D) quantity of loanable funds demanded exceeds the quantity of loanable funds supplied.
E) supply of loanable funds curve shifts rightward.
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Relective thinking
79) If the real interest rate is less than the equilibrium real interest rate, there is a ________
of loanable funds, and ________.
A) surplus; some borrowers cannot ind the funds they want
B) shortage; some borrowers cannot ind the funds they want
C) surplus; borrowers have an easy time inding the funds they want
D) shortage; borrowers have an easy time inding the funds they want
E) shortage; savers increase their saving supply to restore the equilibrium
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Relective thinking
49
80) When the real interest rate ________ the equilibrium real interest rate, there is a
________ of loanable funds and the real interest rate ________.
A) exceeds; surplus; rises
B) is less than; surplus; rises
C) exceeds; shortage; rises
D) is less than; shortage; rises
E) is less than; shortage; falls
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Relective thinking
81) If a surplus of loanable funds exists in the loanable funds market, the real interest rate
________ and the quantity of saving ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) falls; does not change
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Relective thinking
82) The equilibrium real interest rate is 5 percent. If the real interest rate is
A) 3 percent, then the supply of loanable funds curve will shift leftward as new savers enter
the market.
B) 6 percent, the demand for loanable funds curve will shift rightward as irms enter the
market to borrow at the lower rate.
C) 8 percent, there is a surplus of loanable funds.
D) 2 percent, there is a shortage of loanable funds.
E) anything other than 5 percent, the supply of loanable funds curve and/or the demand for
loanable funds curve will shift to move the real interest rate to 5 percent.
Skill: Level 2: Using deinitions
Section: Checkpoint 10.2
Status: Old
AACSB: Relective thinking
50
