Question

Principles of Marcoeconomics Please check my answers.

1. Which of the following will result if there is an increase in the demand for house

• You answered The quantity of home loans will increase.
• The interest rate on the home loans will increase.
• The interest rate on home loans will decrease.
• The quantity of home loans will decrease.

2. If a maximum interest rate for credit cards is set about the equilibrium interest rate.

• Interest rates will increase
• You answered interest rates will decrease.
• There will be a surplus of credit cards.
• No change will occur

3. Which of the following will definitely occur in the coffee market if coffee producing countries experience a bumper harvest at the same time a new study is released demonstration the health of benefits of coffee?

• You answered the equilibrium price of coffee will rise.
• The equilibrium price of coffee will fall.
• The equilibrium quantity will increase.
• The equilibrium quantity will fall.

Answer 1

1) your answer is correct

2) no change will occur - correct

Maximum interest rate is price ceiling and for price ceiling to effective, it should be set below equilibrium price or interest rate.

3) the equilibrium quantity will increase - correct

Study released increases the demand and bumper harvest increases the supply.

Increase in demand leads to increase in price and quantity. Increase in supply leads to decrease in price and increase in quantity. Thus change price is ambiguous but quantity increases certainly.