Explain how each of the following events affect the supply of loanable funds curve:
a) The economy is in a recession so people's disposable income is lower.
b) The stock market is booming so the people's wealth is higher.
c) Fewer college graduates are finding jobs so expected future income is lower.
d) The real interest rate increases.
a) Disposable income is lower, so saving is decreased. The supply of loanable funds curve shifts leftward.
b) People are wealthier, so they save less. The supply of loanable funds curve shifts leftward.
c) Expected future income is lower, so people save more. The supply of loanable funds curve shifts rightward.
d) The quantity of saving increases. There is an upward movement along the supply of loanable funds curve but no shift in the curve.
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If the government provides free schooling for all students, an economist would say education is
a. a free good, having no cost. b. scarce even though its cost is paid by taxpayers rather than by students. c. an example of a good that is no longer scarce. d. all of the above.
When female/male earnings differentials are adjusted for age, education, language, and locational characteristics, the
a. differential between the earnings of males and those of females increases substantially. b. differential between the earnings of males and those of females does not change much. c. corrected earnings of males are equal to those of similar females. d. corrected earnings of females are greater than those of similar males.