Macroeconomics Answers

Using the aggregate demand and aggregate supply (AD-AS) diagram, explain what will happen to the equilibrium price level and Real GDP when each of the following events occurs:

(i) A technological advancement in agricultural sector.

(ii) The Malaysian government’s economic stimulus package of RM8 billion.

(iii) An appreciation of Ringgit Malaysian (RM).

how can Volkswagen be seen to have a competitive advantage over Toyota and Hyundai

optical conditions for inter temporal choice

All else equal, which of the following will occur as a result of an increase in a household’s disposable 

income? 

(i) The household’s savings will increase.

(ii) The will be a surplus of loanable funds in the loanable funds market.

(iii) The real interest rate will rise.

(iv) The equilibrium quantity of loanable funds will fall.

A. Only ii and iv are correct.

B. Only i and ii are correct.

C. Only iii and iv are correct.

D. Only i and iii are correct.

Consider the market for loanable funds. If expectations about South Africa’s future economic 

performance are negative such that firms cancel plans to build new equipment and factories, then in the 

short-run we would expect: 

i. demand for loanable funds to increase.

ii. supply of loanable funds to decrease.

iii. supply will increase and demand for loanable funds to decrease. 

iv. the interest rate to decrease.

A. Only (i) and (ii) are correct.

B. Only (i) and (iii) are correct.

C. Only (iii) is correct.

D. Only (iii) and (iv) are correct.

When government becomes a lender in the loanable funds market: 

(i) The supply of funds increases, and the interest rate decreases.

(ii) The supply of funds increases, and the interest rate increases.

(iii) The supply of funds decreases, and the interest rate decreases. 

(iv) The supply of funds decreases, and the interest rate increases.

A. only (i) is correct.

B. (i) and (ii) are correct.

C. only (iii) is correct.

D. (ii) and (iv) are correct.

Assuming there is no Ricardo-Barro effect, a government budget deficit will____ the real interest rate and 

____ the quantity of investment.

A. raise; increase. 

B. raise; decrease. 

C. lower; increase.

D. lower; decrease.