Question

1. Suppose that a massive oil field was discovered in Michigan. If it was large enough, we would expect that

• oil imports would increase.

• oil consumption would fall.

• the U.S. would lose its comparative advantage in oil drilling.

• the U.S. would become a net exporter of oil.

2.

Suppose the interest rate falls and the quantity of money borrowed (and lent) increases. Which of the following could have caused this to occur?

Multiple Choice

• A decrease in the supply of loans

• An increase in the supply of loans

• A decrease in the demand for loans

• An increase in the demand for loans

3.

True/False: Stocks are also known as fixed income securities.

• False

• True

Answer 1

1) the U.S. would become a net exporter of oil.
A large oil field would make the U.S a net exporter of oil, since
the oil field would increase the supply of oil in the U.S.
2) An increase in the supply of loans.
When there is an increase in the supply of loans, the interest rates
fall. When interest rates fall borrowing becomes cheaper and people
start borrowing more.
In other words, the quantity of money borrowed (and lent) increases.
3) False.