Question

Test 5 #1-5

(1)

What would be the effect of an increase in the demand for loanable funds at every interest rate?

	Interest rates would rise.
	Interest rates would fall.
	There would be no effect on interest rates, because the supply of loanable funds would increase by the same amount.
	None of the above

  

  

  

(2)

The demand curve for loanable funds represents the behavior of

	households.
	foreigners.
	the government.
	businesses.

  

  

  

(3)

A goldsmith need not keep all of the gold deposits people leave with him on hand in his vault, because

	all depositors are not likely to demand their gold at once.
	some depositors are likely to forget that the goldsmith is keeping their gold for them.
	deposits always equal withdrawals.
	none of the above.

  

  

  

(4)

What is the total change in the money supply if the reserve requirement is 10% and deposits rise by $5,000?

	$500
	$4,500
	$45,000
	$50,000

  

  

  

(5)

There is an inverse relationship between a country’s standard of living and its rate of savings and investment.

	true
	false

Answer 1

Solution-

1.

What would be the effect of an increase in the demand for loanable funds at every interest rate?

A. Interest rates would rise. is Correct Option.

2.

The demand curve for loanable funds represents the behavior of D - businesses.is correct Option 3. A goldsmith need not keep all of the gold deposits people leave with him on hand in his vault, because A - all depositors are not likely to demand their gold at once. is Correct Option. 4. What is the total change in the money supply if the reserve requirement is 10% and deposits rise by $5,000? =10% =0.1 decimal = 0.1*5000 = 500 Option A. $500 is correct Answer. 5. There is an inverse relationship between a country’s standard of living and its rate of savings and investment. Given Statement is False NOTE - DO UP VOTE THANK YOU HAVE A NICE DAY