AP Macro - Loanable Funds Market

Front

Which of the following is NOT true in regards to the loanable funds market?
The government makes up the supply of loanable funds,
Savers make up the supply of loanable funds,
Borrowers of loanable funds include households, businesses, and government,
The laws of supply and demand impact real interest rates

Back

The government makes up the supply of loanable funds

Front

What is the relationship between real interest rates and quantity of loanable funds supplied?

Back

It is a direct relationship, meaning the higher the real interest rate, the more loanable funds supplied.

Front

Which of the following belongs on the Y-axis of the loanable funds graph? nominal interest rate, real interest rate, price level, real GDP

Back

real interest rate

Front

The foreign demand for US goods increases. This will cause which of the following changes to the US loanable funds market? Options: an increase in demand for loanable funds, an increase in supply of loanable funds, a decrease in demand for loanable funds, a decrease in supply of loanable funds

Back

an increase in demand for loanable funds

Front

The Brazilian government passes a large spending bill that will be funded through deficit spending. Which answer best describes the impact this will have on the Brazilian loanable funds market?

Back

demand for loanable funds will increase; real interest rate will increase

Front

Which of the following is a likely explanation for this change in the loanable funds market?
an increase in government deficit spending,
households fear an economic recession in the near future and begin spending less,
foreign demand for the country's goods increases,
the discount rate increases, meaning it is more expensive for banks to borrow from the central bank

Back

households fear an economic recession in the near future and begin spending less