Everything else remaining unchanged, what is likely to happen to the equilibrium quantity of credit and the real interest rate if:
a. the credit demand curve shifts to the right?
b. the credit supply curve shifts to the left?
What will be an ideal response?
a. Everything else remaining unchanged, if the credit demand curve shifts to the right, there will be an increase in both the equilibrium quantity of credit and the real interest rate.
b. Everything else remaining unchanged, if the credit supply curve shifts to the left, there will be an increase in the equilibrium real interest rate but a decrease in the equilibrium quantity of credit.
You might also like to view...
In Country Z, the government simultaneously increases its expenditures by $25 billion and increases taxes by $25 billion. If the MPS is equal to 0.2, the government's action ________ real GDP by ________
A) increases; $125 billion B) increases; $25 billion C) increases; $100 billion D) has no effect on; $0
According to Keynesians, an increase in production when the money supply is fixed will
a. increase the transactions demand for money and that will cause the velocity of money to increase b. increase the transactions demand for money and that will cause the velocity of money to decrease c. decrease the transactions demand for money and that will cause the velocity of money to increase d. decrease the transactions demand for money and that will cause the velocity of money to decrease e. increase the speculative demand for money and that will cause the velocity of money to increase