Chapter 2 Overview VIdeo Quiz
1. Which of the following best describes the Loanable Funds Theory?
The theory that suggests the market interest rate is determined by factors
controlling the foreign demand for loanable funds
The theory that suggests the market interest rate is determined by factors
controlling the supply and demand for loanable funds
The theory that suggests the market interest rate is independent of factors
controlling the supply and demand for loanable funds
The theory that suggests the market interest rate is solely determined by the
federal government's expenditure and tax policies
2. If the supply curve for loanable funds is upward sloping, what does this imply?
The demand for loanable funds is more than the supply of loanable funds by
businesses and governments.
The supply of loanable funds is higher when interest rates are low.
The supply of loanable funds by households is more than the demand for
loanable funds.
The supply of loanable funds by businesses and governments is higher than the
demand for loanable funds.
3.Which of the following conditions is true at the equilibrium interest rate in the market
for loanable funds?
Households have a higher demand for loanable funds than the federal
government.
Aggregate demand equals aggregate supply.
Businesses demand more loanable funds than households.
The supply of loanable funds exceeds the demand for loanable funds
4. Which of the following best describes a direct result of an increased government
deficit on government demand for loanable funds?
It raises interest rates, leading to decreased government demand for loanable
funds.
It does not affect the demand for loanable funds by the government.
It increases the quantity of loanable funds demanded at any prevailing
interest rate.
It leads to a decrease in the quantity of loanable funds demanded at any
prevailing interest rate.
5. Which of the following best describes the changes inflationary expectations have on
the the loanable funds market?
