Question

QUESTION 40

1. The demand curve for loanable funds is

   A		upward sloping, indicating that lower interest rates are associated with a lower demand for loanable funds.
   B		downward sloping, indicating that businesses will increase their demand at lower interest rates, but that consumers will probably decrease the supply of loanable funds at lower interest rates.
   C		downward sloping, indicating that both businesses and consumers will increase the quantity demanded of loanable funds as the interest rate decreases.
   D		horizontal at the equilibrium interest rate.
   E		c and d

QUESTION 41

1. The supply of loanable funds depends most directly on

   A		investment expenditures.
   B		people's saving and newly created money.
   C		bond and stock activity.
   D		the profits of firms.
   E		b and d

Question 42

The supply curve of loanable funds is __________ sloping, which implies that as the interest rate __________, the __________ loanable funds will increase.

A		downward; decreases; demand for
B		upward; increases; supply of
C		upward; decreases; supply of
D		downward; decreases; quantity demanded of
E		upward; increases; quantity supplied of

Question 48

A negative externality is

A		a type of tax.
B		a type of subsidy.
C		a type of money price.
D		linked to external costs.
E		linked to external benefits.

Answer 1

40) option C is correct. When the rate of interest is reduced, the demand for loanable funds as borrowings as well as for investment purposes should be higher and vice versa

41) option B is correct. Basically, national saving, that is comprised of public saving and private savings determine the supply of loanable funds. Newly created money also influences the supply

42) option E is correct

48) option D is correct