Suppose the real interest rate increases from 4 percent to 6 percent. As a result,
A) governments decrease their demand for loanable funds.
B) firms increase their demand for loanable funds.
C) governments increase the supply of loanable funds.
D) firms decrease the quantity demanded of loanable funds.
E) governments decrease the quantity supplied of loanable funds.
D
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Under the new Constitution in 1789, the states gained the sovereign power to
(a) levy taxes. (b) power and issue money. (c) "regulate" the value of money. (d) create corporations by special franchise.
Which of the following problems will most likely occur with a system of flexible exchange rates?
A. Macroeconomic instability as exports and imports fluctuate with the exchange rates. B. Government favoritism toward selected importers of goods and services. C. The emergence of black markets for foreign currency. D. Distortions in trade patterns away from the pattern suggested by comparative advantage.