Loanable Funds and Phillips Curve Quiz

What does the loanable funds market illustrate?

• The relationship between the supply and demand for money.

• The relationship between the supply and demand for loanable funds.

• The relationship between inflation and unemployment.

• The relationship between aggregate supply and aggregate demand.

• The relationship between interest rates and the money supply.

In the loanable funds market, what happens when the government runs a budget deficit?

• The supply of loanable funds increases.

• The demand for loanable funds decreases.

• The demand for loanable funds increases.

• The supply of loanable funds decreases.

• The interest rate decreases.

Which of the following is true about the Phillips Curve in the short run?

• It shows a positive relationship between inflation and unemployment.

• It shows a negative relationship between inflation and unemployment.

• It shows no relationship between inflation and unemployment.

• It shows a constant relationship between inflation and unemployment.

• It shows a fluctuating relationship between inflation and unemployment.

What is the effect of an increase in interest rates on the loanable funds market?

• It increases the supply of loanable funds.

• It decreases the supply of loanable funds.

• It increases the demand for loanable funds.

• It decreases the demand for loanable funds.

• It has no effect on the loanable funds market.

Which of the following shifts the Phillips Curve to the right?

• An increase in aggregate demand.

• A decrease in aggregate demand.

• An increase in inflation expectations.

• A decrease in inflation expectations.

• A decrease in the natural rate of unemployment.

What is the long-run Phillips Curve?

• A vertical line at the natural rate of unemployment.

• A horizontal line at zero inflation.

• A downward-sloping curve.

• An upward-sloping curve.

• A curve that shifts with changes in inflation expectations.

In the loanable funds market, what is the effect of an increase in savings?

• The supply of loanable funds decreases.

• The supply of loanable funds increases.

• The demand for loanable funds decreases.

• The demand for loanable funds increases.

• The interest rate increases.

What does the Phillips Curve suggest about the trade-off between inflation and unemployment in the short run?

• There is no trade-off.

• There is a direct trade-off.

• There is an inverse trade-off.

• The trade-off is constant.

• The trade-off varies with changes in fiscal policy.

Which of the following would cause a movement along the Phillips Curve?

• A change in inflation expectations.

• A change in aggregate supply.

• A change in aggregate demand.

• A change in the natural rate of unemployment.

• A change in government policy.

What is the effect of a decrease in taxes on the loanable funds market?

• It increases the supply of loanable funds.

• It decreases the supply of loanable funds.

• It increases the demand for loanable funds.

• It decreases the demand for loanable funds.

• It has no effect on the loanable funds market.