322-5

  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:  





    E) none of the above
  7. According to the liquidity preference theory:  





    D) A and B only  
  8. Under the loanable funds theory of interest rates, when interest rates rise and people save less, this is referred to as the:  





    C) income effect.  
  9. The idea that consumers prefer current consumption over future consumption is referred to as:  





    B) time preference.  
  10. A stable equilibrium interest rate in the loanable funds market requires that:  





    D) A and C only  
Author
SAngell3
ID
222407
Card Set
322-5
Description
322-5
Updated