A) the inflationary premium.
B) the time preference.
C) the difference from what the lender receives and the borrower pays.
D) consumption smoothing.
E) a surplus of loanable funds.
G) A) and D)
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A) the difference between gross income and disposable income.
B) the ratio of personal income to taxes paid on income.
C) the percent reduction in taxes due to permitted deductions.
D) personal savings as a percentage of disposable income.
E) cash savings as a percentage of total net worth.
G) C) and D)
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A) Firms are more pessimistic, and governments run fewer deficits.
B) A baby boom begins, and investor confidence rises.
C) People have lower time preferences, and governments run larger deficits.
D) People have lower time preferences, and capital is more productive.
E) More individuals are middle-aged, and wealth increases.
G) B) and E)
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A) are most likely to be a borrower concerned mostly about the real interest rate you will earn.
B) are most likely to be a lender concerned mostly about the real interest rate you will earn.
C) are most likely to be a borrower concerned mostly about the nominal interest rate you will earn.
D) are most likely to be a lender concerned mostly about the nominal interest rate you will earn.
E) would only be concerned with whether inflation was greater or less than the nominal rate of interest based on the Fisher equation.
G) A) and B)
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A) people tend to spend about the same amount each month.
B) people tend to spend about the same amount each year, and if more is spent this year than in the past, they would tend to spend less next year.
C) consumption varies less than income over a person's lifetime. In early life people tend to borrow, in late life people tend to dissave, but in their middle years they tend to save.
D) consumption patterns tend to correlate perfectly with income. People spend the exact amount of their incomes over their lifetimes.
E) consumption tends to vary more than income over a person's lifetime. Although people should smooth their consumption over the years, they don't. If consumption were smoothed, people would be better off.
G) C) and D)
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A piece of capital, such as manufacturin...View Answer
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The measured rate is the percentage of d...View Answer
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A) a cost to both savers and borrowers.
B) only a cost to savers.
C) only a return to borrowers.
D) both a cost to savers and a return to borrowers.
E) both a return to savers and a cost to borrowers.
G) All of the above
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Time preference refers to the fact that ...View Answer
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A) quantity demanded of loanable funds equals the quantity supplied of loanable funds, and equilibrium is reached.
B) quantity demanded of loanable funds is greater than the quantity supplied of loanable funds, and there is a surplus of loanable funds.
C) demand for loanable funds is greater than the supply of loanable funds, and there is a shortage of loanable funds.
D) quantity demanded of loanable funds is greater than the quantity supplied of loanable funds, and there is a shortage of loanable funds.
E) quantity demanded of loanable funds is less than the quantity supplied of loanable funds, and there is a surplus of loanable funds.
G) A) and E)
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A) supply of loanable funds; shortage
B) quantity demanded of loanable funds; surplus
C) demand for loanable funds; shortage
D) quantity supplied of loanable funds; surplus
E) demand of loanable funds; surplus
G) A) and B)
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A) a higher supply of loanable funds.
B) a higher demand for loanable funds.
C) a lower supply of loanable funds.
D) higher productivity of capital.
E) a decrease in equilibrium interest rates.
G) B) and C)
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A) the rate of interest charged to most large commercial borrowers.
B) equal to the real interest rate minus the inflation rate.
C) the rate charged on loans for automobiles and other personal loans but not the rate charged on home loans.
D) the interest rate that is not corrected for inflation.
E) the interest rate that is corrected for inflation.
G) D) and E)
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A) the equilibrium quantity of loanable funds to decrease and the equilibrium interest rate to increase.
B) the equilibrium quantity of loanable funds to increase and the equilibrium interest rate to decrease.
C) both the equilibrium quantity of loanable funds and the equilibrium interest rate to increase.
D) the equilibrium interest rate to decrease, but the equilibrium quantity of loanable funds would remain unchanged.
E) the equilibrium interest rate to increase, but the equilibrium quantity of loanable funds would remain unchanged.
G) A) and D)
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A) and assuming they retire at age 50, Cindy will have exactly 50 percent more than Melvin.
B) and assuming they retire at age 50, Cindy will have over 50 percent more than Melvin.
C) and assuming they retire at age 50, Cindy will have less than 50 percent more than Melvin.
D) and assuming they both retire at age 60, Cindy will have less than Melvin.
E) the difference between the two will get larger with higher inflation.
G) C) and D)
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A) savings to increase.
B) savings to decrease.
C) borrowing to decline.
D) consumption variation to increase.
E) savings as a percentage of income to fall.
G) None of the above
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A) people prefer to have more free time rather than less.
B) people prefer to have less free time work more) rather than more being unemployed) .
C) interest rates are higher for long-term loans than for short-term loans.
D) people prefer goods sooner rather than later.
E) people prefer goods later rather than sooner save the best for last) .
G) B) and E)
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A) real interest rate = nominal interest rate + inflation rate
B) nominal interest rate = real interest rate + inflation rate
C) real interest rate = inflation rate - nominal interest rate
D) real interest rate - nominal interest rate = inflation rate
E) nominal interest rate + real interest rate = inflation rate
G) C) and D)
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A) nominal rate of interest as the inflation-adjusted rate of interest.
B) real rate of interest as the inflation-adjusted rate of interest.
C) rate of inflation as the nominal interest rate.
D) loanable funds market as the market where only governments make loans.
E) supply of loanable funds as upward sloping, with the slope equaling the rate of inflation.
G) None of the above
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A) This means the nominal rate of interest is 7 percent and the real rate is 5 percent.
B) This means the real rate of interest is 2 percent.
C) The textbook states that all interest rates would be assumed to be the real rate; thus, the nominal rate is 12 percent.
D) This means the nominal rate of interest is 35 percent.
E) If the rate of inflation falls, your real rate of interest from this asset would also fall.
G) C) and D)
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