Internal balance can be graphically represented as the intersection of the IS curve with the LM curve

It is easy for one financial institution to reduce its leverage by acting alone, but when many financial institutions try to do the same thing at once, asset prices fall rapidly and bank capital declines for all such institutions

a. True b. False.

If a country went from a government budget deficit to a surplus, national saving would

a. increase, shifting the supply of loanable funds right. b. increase, shifting the supply of loanable funds left. c. decrease, shifting the demand for loanable funds right. d. decrease, shifting the demand for loanable funds left.