A decrease in the supply of loanable funds and an increase in the demand for loanable funds will:
A. Increase the interest rate and the quantity of funds loaned
B. Decrease the interest rate and the quantity of funds loaned
C. Increase the interest rate, but the quantity of funds loaned may either increase or decrease
D. Decrease the interest rate, but the quantity of funds loaned may either increase or decrease
C. Increase the interest rate, but the quantity of funds loaned may either increase or decrease
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If the U.S. were to revert to a gold standard, trade deficits would:
A. result in gold reserves in the U.S. decreasing. B. result in high inflation. C. quickly disappear. D. result in lower domestic interest rates.
In 1985 a desert community stopped pumping water from a 1000 foot well because it had run dry. In 2005 the price of water doubled. The community then drilled the well deeper and started pumping again. In this community,
A. water production is characterized by increasing opportunity costs. B. markets cannot reach equilibrium because there is a persistent shortage of water. C. the supply of water is perfectly inelastic because it is a finite resource. D. higher water prices can reduce quantity demanded but cannot increase quantity supplied.