Which of the following will lead to an increase in the demand for loanable funds in the US?
a. decrease in the real interest rate in the US
b. increase in household saving
c. an increase in US government borrowing
d. an increase in the supply of loanable funds in other countries
e. decrease in the supply of loanable funds in the US
Ans: c. an increase in US government borrowing
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According to the law of one price, identical products should sell for the same price everywhere if
A) transactions costs are zero. B) consumers have knowledge of the prices charged for products in different markets. C) there are no tariffs or other restrictions on imports or exports. D) firms can prevent consumers from engaging in arbitrage.
In a simple macroeconomic model, replacing the assumption of exogenous investment with the accelerator theory of investment ________ the effect on equilibrium GDP of fiscal policy changes, and ________ the effect on equilibrium GDP of changes in
autonomous consumption. A) increases, increases B) increases, dampens C) dampens, increases D) dampens, dampens