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63. If the quantity of loanable funds supplied is greater than the quantity demanded, then there is a
a.
shortage of loanable funds and the interest rate will fall.
b.
shortage of loanable funds and the interest rate will rise.
c.
surplus of loanable funds and the interest rate will fall.
d.
surplus of loanable funds and the interest rate will rise.
64. If the quantity of loanable funds supplied is less than the quantity demanded, then there is a
a.
shortage of loanable funds and the interest rate will fall.
b.
shortage of loanable funds and the interest rate will rise.
c.
surplus of loanable funds and the interest rate will fall.
d.
surplus of loanable funds and the interest rate will rise.
65. If there is a shortage of loanable funds, then
a.
the demand for loanable funds will shift right so the real interest rate rises.
b.
the supply of loanable funds will shift left so the real interest rate falls.
c.
there will be no shifts of the curves, but the real interest rate rises.
d.
there will be no shifts of the curves, but the real interest rate falls.
66. If there is a surplus in the U.S. loanable funds market, then
a.
NCO > I.
b.
NCO < I.
c.
NCO + I > S.
d.
NCO + I < S.
67. If there is a surplus in the market for loanable funds, the resulting change in the real interest rate
a.
reduces both the quantity of loanable funds supplied and the quantity of loanable funds demanded.
b.
reduces the quantity of loanable funds supplied and raises the quantity of loanable funds demanded
c.
raises both the quantity of loanable funds supplied and the quantity of loanable funds demanded.
d.
raises the quantity of loanable funds supplied and reduces the quantity of loanable funds demanded.
68. If there is a surplus in the U.S. loanable funds market, then the interest rate
a.
rises, which increases quantity of loanable funds demanded.
b.
rises, which decreases the quantity of loanable funds demanded.
c.
falls, which increases the quantity of loanable funds demanded.
d.
falls, which decreases the quantity of loanable funds demanded.
69. If at a given real interest rate desired national saving is $60 billion, domestic investment is $30 billion, and net capital
outflow is $20 billion, then at that real interest rate in the loanable funds market there is a
a.
surplus. The real interest rate will rise.
b.
surplus. The real interest rate will fall.
c.
shortage. The real interest rate will rise.
d.
shortage. The real interest rate will fall.
70. If at a given real interest rate desired national saving is $140 billion, domestic investment is $90 billion, and net
capital outflow is $60 billion, then at that real interest rate in the loanable funds market there is a
a.
surplus. The real interest rate will rise.
b.
surplus. The real interest rate will fall.
c.
shortage. The real interest rate will rise.
d.
shortage. The real interest rate will fall.
71. If at a given real interest rate desired national saving is $200 billion, domestic investment is $100 billion, and net
capital outflow is $80 billion, then at that real interest rate in the loanable funds market there is a
a.
surplus. The real interest rate will rise.
b.
surplus. The real interest rate will fall.
c.
shortage. The real interest rate will rise.
d.
shortage. The real interest rate will fall.
72. If the demand for loanable funds shifts right, then
a.
the real interest rate and the equilibrium quantity of loanable funds both fall.
b.
the real interest rate falls and the equilibrium quantity of loanable funds rises.
c.
the real interest rate and the equilibrium quantity of loanable funds both rise.
d.
the real interest rate rises and the equilibrium quantify of loanable funds falls.
73. If the demand for loanable funds shifts left, then
a.
the real interest rate and the equilibrium quantity of loanable funds both fall.
b.
the real interest rate falls and the equilibrium quantity of loanable funds rises.
c.
the real interest rate and the equilibrium quantity of loanable funds both rise.
d.
the real interest rate rises and the equilibrium quantity of loanable funds falls.
74. If the supply of loanable funds shifts right, then the equilibrium
a.
interest rate falls, so domestic residents will want to purchase more foreign assets.
b.
interest rate falls, so domestic residents will want to purchase fewer foreign assets.
c.
interest rate rises, so domestic residents will want to purchase more foreign assets.
d.
interest rate rises, so domestic residents will want to purchase fewer foreign assets.
75. If the supply of loanable funds shifts right, then
a.
the real interest rate and the equilibrium quantity of loanable funds both fall.
b.
the real interest rate falls and the equilibrium quantity of loanable funds rises.
c.
the real interest rate and the equilibrium quantity of loanable funds both rise.
d.
the real interest rate rises and the equilibrium quantity of loanable funds falls.
76. If the supply of loanable funds curve shifts right, then the equilibrium
a.
interest rate and level of net capital outflows rise.
b.
interest rate rises and the equilibrium level of net capital outflow falls.
c.
interest rate falls and the equilibrium level of net capital outflow rises.
d.
interest rate and level of net capital outflows fall.
77. If the supply of loanable funds shifts left, then
a.
the real interest rate and the equilibrium quantity of loanable funds both fall.
b.
the real interest rate falls and the equilibrium quantity of loanable funds rises.
c.
the real interest rate and the equilibrium quantity of loanable funds both rise.
d.
the real interest rate rises and the equilibrium quantity of loanable funds falls.
78. Which of the following would make both the equilibrium real interest rate and the equilibrium quantity of loanable
funds increase?
a.
The demand for loanable funds shifts right.
b.
The demand for loanable funds shifts left.
c.
The supply of loanable funds shifts right.
d.
The supply of loanable funds shifts left.
79. Which of the following would make both the equilibrium real interest rate and the equilibrium quantity of loanable
funds decrease?
a.
The demand for loanable funds shifts right.
b.
The demand for loanable funds shifts left.
c.
The supply of loanable funds shifts right.
d.
The supply of loanable funds shifts left.
80. Which of the following would make the equilibrium real interest rate decrease and the equilibrium quantity of
loanable funds increase?
a.
The demand for loanable funds shifts right.
b.
The demand for loanable funds shifts left
c.
The supply of loanable funds shifts right.
d.
The supply of loanable funds shifts left.
81. Which of the following would make the equilibrium real interest rate increase and the equilibrium quantity of funds
decrease?
a.
The demand for loanable funds shifts right.
b.
The demand for loanable funds shifts left.
c.
The supply of loanable funds shifts right.
d.
The supply of loanable funds shifts left.
82. Suppose the U.S. supply of loanable funds shifts left. This will
a.
increase U.S. net capital outflow and increase the quantity of loanable funds demanded.
b.
increase U.S. net capital outflow and decrease the quantity of loanable funds demanded.
c.
decrease U.S. net capital outflow and increase the quantity of loanable funds demanded.
d.
decrease U.S. net capital outflow and decrease the quantity of loanable funds demanded.
83. If the supply of loanable funds shifts right, then the equilibrium
a.
levels of net capital outflow and domestic investment decrease.
b.
level of net capital outflow increases and the equilibrium level of domestic investment decreases.
c.
level of net capital outflow decreases and the equilibrium level of domestic investment increases.
d.
levels of net capital outflow and domestic investment increase.
Figure 32-1
84. Refer to Figure 32-1. The loanable funds market is in equilibrium at
a.
2 percent, $20 billion.
b.
4 percent, $40 billion.
c.
6 percent, $60 billion.
d.
None of the above is correct.
85. Refer to Figure 32-1. If the real interest rate is 6 percent, the quantity of loanable funds demanded is
a.
$20 billion, and the quantity supplied is $40 billion.
b.
$20 billion, and the quantity supplied is $60 billion.
c.
$60 billion, and the quantity supplied is $20 billion.
d.
$60 billion, and the quantity supplied is $40 billion.
86. Refer to Figure 32-1. If the real interest rate is 2 percent, there will be a
a.
surplus of $20 billion.
b.
surplus of $40 billion.
c.
shortage of $20 billion.
d.
shortage of $40 billion.
87. Refer to Figure 32-1. If the real interest rate is 6 percent, there will be pressure for
a.
the real interest rate to fall.
b.
the demand for loanable funds curve to shift left.
c.
the supply for loanable funds curve to shift right.
d.
All of the above are correct.
88. The value of net exports equals the value of
a.
national saving.
b.
public saving.
c.
national saving - net capital outflow.
d.
national saving - domestic investment.
89. In an open economy,
a.
net capital outflow = imports.
b.
net capital outflow = net exports.
c.
net capital outflow = exports.
d.
None of the above is correct.
90. If net exports are positive, then
a.
exports are greater than imports.
b.
net capital outflow is negative.
c.
Both of the above are correct.
d.
Neither of the above is correct.
91. If U.S. net exports are negative, then net capital outflow is
a.
positive, so foreign assets bought by Americans are greater than American assets bought by foreigners.
b.
positive, so American assets bought by foreigners are greater than foreign assets bought by Americans.
c.
negative, so foreign assets bought by Americans are greater than American assets bought by foreigners.
d.
negative, so American assets bought by foreigners are greater than foreign assets bought by Americans.
92. If U.S. net exports are positive, then net capital outflow is
a.
positive, so foreign assets bought by Americans are greater than American assets bought by foreigners.
b.
positive, so American assets bought by foreigners are greater than foreign assets bought by Americans.
c.
negative, so foreign assets bought by Americans are greater than American assets bought by foreigners.
d.
negative, so American assets bought by foreigners are greater than foreign assets bought by Americans.
93. In the open-economy macroeconomic model, the amount of net capital outflow represents the quantity of dollars
a.
supplied for the purpose of selling assets domestically.
b.
supplied for the purpose of buying foreign assets.
c.
demanded for the purpose of buying U.S. net exports of goods and services.
d.
demanded for the purpose of importing foreign goods and services.
94. In the open-economy macroeconomic model, the supply of dollars in the market for foreign-currency exchange comes
from
a.
net exports
b.
net capital outflow
c.
net exports + net capital outflow
d.
net exports - net capital outflow
95. In the open-economy macroeconomic model, the supply of dollars in the market for foreign-currency exchange comes
from
a.
national saving
b.
domestic investment
c.
net exports
d.
net capital outflow
96. Which of the following is included in the supply of U.S. dollars in the market for foreign-currency exchange in the
open-economy macroeconomic model?
a.
a U.S. bank loans dollars to Tom to buy a U.S. made motorcycle
b.
a U.S. tire maker wants to build a new factory in China
c.
a U.S. company wants to import goods to sell in its retail stores
d.
All of the above are correct.
97. Which of the following is considered part of the supply of U.S. dollars in the market for foreign-currency exchange in
the open-economy macroeconomic model?
a.
both a U.S. bank wanting to lend money to a Canadian company and a U.S. firm wanting to buy computers
made in South Korea
b.
a U.S. bank wanting to lend money to a Canadian company, but not a U.S. firm wanting to buy computers
made in South Korea
c.
a U.S. firm wanting to buy computers made in South Korea, but not a U.S.bank wanting to lend money to a
Canadian company
d.
neither a U.S. bank wanting to lend money to a Canadian company nor a U.S. firm wanting to buy computers
made in South Korea
98. In the open-economy macroeconomic model, if net capital outflow increases then
a.
the demand for dollars in the market for foreign-currency exchange shifts right.
b.
the demand for dollars in the market for foreign-currency exchange shifts left.
c.
the supply of dollars in the market for foreign-currency exchange shifts right.
d.
the supply of dollars in the market for foreign-currency exchange shifts left.
99. Which of the following would tend to shift the supply of dollars in the market for foreign-currency exchange in the
open-economy macroeconomic model to the right?
a.
the exchange rate rises
b.
the exchange rate falls
c.
the expected rate of return on U.S. assets rises
d.
the expected rate of return on U.S. assets falls
100. Other things the same, which of the following would shift the supply of dollars in the market for foreign exchange to
the right?
a.
foreigners want to buy more U.S. bonds
b.
foreigners want to buy fewer U.S. bonds
c.
foreigners want to buy more U.S. goods and services.
d.
foreigners want to buy fewer U.S. goods and services.
101. Which of the following would shift the supply of dollars in the market for foreign-currency exchange of the open-
economy macroeconomic model to the left?
a.
the exchange rate rises
b.
the exchange rate falls
c.
the expected rate of return on U.S. assets rises
d.
the expected rate of return on U.S. assets falls
102. Other things the same, if the expected return on U.S. assets increases, the
a.
supply of dollars in the market for foreign-currency exchange shifts right.
b.
supply of dollars in the market for foreign-currency exchange shifts left.
c.
demand for dollars in the market for foreign-currency exchange shifts right
d.
demand for dollars in the market for foreign-currency exchange shifts left.
103. At a given real exchange rate, which of the following, by itself, would increase the supply of dollars in the market for
foreign-currency exchange?
a.
foreign citizens want to buy more U.S. bonds
b.
U.S. citizens want to buy more foreign bonds
c.
foreign citizens want to buy more U.S. goods
d.
U.S. citizens want to buy more foreign goods
