Question

1. An increase in the interest rate will increase the demand for loanable funds. T/F

2. If the aggregate demand curve shifts rightward,

	a	the price level increases and output decreases
	b	the resulting increase in the price level is usually called cost-push inflation
	c	the resulting increase in the price level is usually called demand-pull inflation
	d	the price level increases only if there is also a leftward shift of the aggregate supply curve
	e	the price level decreases and output decreases

3) people who are not currently employed, but say they want a job, are counted as unemployed only if they

	a	have previously held a job
	b	are actively seeking employment
	c	are willing to accept a reasonable offer
	d	are between 16 and 65 years of age
	e	are willing to accept any offer of employment

4 ) Deflation refers to

	a	decreasing relative prices
	b	a decreasing price level
	c	a slowing down of the rate of inflation
	d	a slowing down of the rate of relative price decreases
	e	a federal government policy of running budget surpluses

Answer 1

Ans 1: False, it will decrease the demand for loanable funds because as the interest rate rises the cost of borrowing rises. So, the demand for funds falls.

Ans 2:

c	the resulting increase in the price level is usually called demand-pull inflation

(Demand-pull inflation is rise in price level due to rise in demand).

Ans 3:  

b	are actively seeking employment

If they are not seeking for employment then they would not be counted under labor force.

Ans 4:

b	a decreasing price level