Macroeconomics Answers

Assuming there is no Ricardo-Barro effect, a government budget deficit will____ the real interest rate and ____ the quantity of investment.

lower; decrease.

raise; increase.

raise; decrease.

lower; increase.

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.

(i) and (ii) are correct.

(ii) and (iv) are correct.

only (iii) is correct.

only (i) is 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.

Only (iii) is correct.

Only (i) and (iii) are correct.

Only (iii) and (iv) are correct.

Only (i) and (ii) are correct.

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.

Only i and iii are correct.

Only iii and iv are correct.

Only i and ii are correct.

Only ii and iv are correct.

Suppose there is an excess demand of loanable funds. Which of the following adjustments will occur to restore equilibrium in that market?  

(i)   The real interest rate will decrease.

(ii)  The quantity of loanable funds demanded will rise.

(iii)   The real interest rate will increase.

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

Only (ii) and (iii) are correct.

Only (iii) is correct.

Only (i) and (iv) are correct.

Only (iii) and (iv) are correct.

impact of the demand management policies using AD-AS framework

Explain the relationship between endogenous and exogenous variables in the labor market