Loanable Funds Market

An increase in government spending only leads to an increase in the Demand for Loanable Funds when

• the spending is on infrastructure.
• the spending is on education.
• the spending is deficit spending.
• the spending leads to a surplus.

The shift in the graph could be caused by

• government deficit spending.
• the crowding out effect.
• an increase in wealth.
• an increase in personal savings.

The shift in the graph could be caused by

• an increase in consumer wealth.
• expectations of a recession.
• a government surplus.
• the balanced budget multiplier.

The shift in the graph could be caused by

• a government budget deficit.
• a government budget surplus.
• an increase in consumer wealth.
• a new technological innovation.

The shift in the graph could be caused by

• the economy contracting.
• a decline in population.
• a new technology revolutionizes business.
• the government eliminates default risk.

The shift in the graph could be caused by

• the crowding out effect.
• new technology.
• the government guarantees home loans.
• the market is expected to boom.

The shift in the graph could be caused by

• an increase in consumer wealth.
• an increase in deficit spending.
• the Fed buys securities.
• the population grows.

The shift in the graph could be caused by

• increasing the discount rate.
• decreasing taxes.
• decreasing the Federal Funds rate.
• lowering the reserve requirement.

If investors expect the economy is headed for expansion the ______ of loanable funds will _______.

• demand; decrease
• demand; increase
• supply; decrease
• supply; increase

When entities like Fannie Mae and Freddie Mac guarantee a loan they are eliminating _____ for investors.

• default risk
• irrational exuberance
• wealth effect
• technological change