Taxes cause:
a. Market distortions
b. A reduction in incentives to work
c. A decrease in wealth creating transactions
d. All of the above
d
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According to the interest-rate-based transmission mechanism for monetary policy, a decrease in the money supply will cause the
A) interest rate to fall, causing planned real investment spending to rise and leading to an increase in aggregate demand. B) interest rate to fall, causing planned real investment spending to rise and leading to a decrease in aggregate demand. C) interest rate to rise, causing planned real investment spending to fall and leading to a decrease in aggregate demand. D) interest rate to rise, causing planned real investment spending to rise and leading to a decrease in aggregate demand.
In the loanable funds market, a shortage of loanable funds occurs when the
A) supply of loanable funds exceeds demand for loanable funds. B) quantity of loanable funds supplied exceeds the quantity of loanable funds demanded. C) demand for loanable funds exceeds supply of loanable funds. D) supply of loanable funds curve shifts rightward. E) quantity of loanable funds demanded exceeds the quantity of loanable funds supplied.