Suppose households decide to reduce savings because they want to enjoy more present time than future time. In this case, the loanable funds model predicts that
A) interest rate goes down, and quantity of borrowed funds increases.
B) interest rate goes down, and quantity of borrowed funds decreases.
C) interest rate goes up, and quantity of borrowed funds decreases.
D) interest rate goes up, and quantity of borrowed funds increases.
C
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According to the quantity theory of money, in the long run
A) an increase in the quantity of money creates an increase the price level but no increase in real GDP. B) the quantity of money in the economy will always be just the right amount. C) an increase in the quantity of money creates an increase in the price level and in real GDP. D) None of the above answers are correct.
Indifference curves that cross violate the property of
a. the marginal rate of substitution. b. transitivity. c. indifference curves bowing inward. d. They do not violate any properties of indifference curves.