322-5

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Author:
SAngell3
ID:
222407
Filename:
322-5
Updated:
2013-06-04 13:35:48
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322
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322-5
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  1. In the real world there are thousands of interest rates, but there is no such thing as "the interest rate."  

    A) True  
    B) False
    A) True  
  2. The cautionary motive for holding money arises because we live in a certain world and can predict exactly what our expenditures and our income will be in the future.  

    A) True  
    B) False
    B) False
  3. When U.S. interest rates decline relative to foreign interest rates, foreign investors find it more attractive to lend in the United States.  
    A) True  
    B) False
    B) False
  4. According to the loanable funds theory of interest rates, demand for loanable funds is made up of demand for credit by domestic businesses, consumers, and governments.  

    A) True  
    B) False
    B) False
  5. Under the liquidity preference theory of interest rates, the outlets for investor funds include stocks, bonds, and cash balances.  

    A) True  
    B) False
    B) False
  6. The theory which argues that the risk-free interest rate is determined by the interaction of the demand for credit and the nation's supply of credit is known as the:  

    A) classical theory of interest rates.  
    B) liquidity preference theory of interest rates.  
    C) efficient market hypothesis.  
    D) efficient markets theory.  
    E) none of the above
    E) none of the above
  7. According to the liquidity preference theory:  

    A) there is a precautionary motive for holding money.  
    B) there is a speculative motive for holding money.  
    C) there is a transnational motive for holding money.  
    D) A and B only  
    E) none of the above
    D) A and B only  
    (this multiple choice question has been scrambled)
  8. Under the loanable funds theory of interest rates, when interest rates rise and people save less, this is referred to as the:  

    A) substitution effect.  
    B) income effect.  
    C) reduced-savings effect.  
    D) wealth effect.  
    E) none of the above
    B) income effect.  
    (this multiple choice question has been scrambled)
  9. The idea that consumers prefer current consumption over future consumption is referred to as:  

    A) the substitution effect.  
    B) time preference.  
    C) consumption preference.  
    D) savings effect.  
    E) none of the above
    B) time preference.  
    (this multiple choice question has been scrambled)
  10. A stable equilibrium interest rate in the loanable funds market requires that:  

    A) quantity of loanable funds supplied equals quantity of loanable funds demanded.  
    B) planned saving equals planned investment.  
    C) money supply equals the GDP.  
    D) A and C only  
    E) all of the above
    D) A and C only  
    (this multiple choice question has been scrambled)

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