If Foreign Entities Save Less and Governments Run More Deficits,we

question 114

Multiple Choice

If foreign entities save less and governments run more deficits,we would correctly say that

• A) the new equilibrium quantity of loanable funds would decrease,but we would be unable to tell if the new equilibrium interest rate would be higher or lower than the original.
• B) the new equilibrium quantity of loanable funds would increase,but we would be unable to tell if the new equilibrium interest rate would be higher or lower than the original.
• C) the new equilibrium quantity of loanable funds would be indeterminate,but we would be certain the new equilibrium interest rate would be higher than the original.
• D) the new equilibrium quantity of loanable funds would be indeterminate,but we would be certain the new equilibrium interest rate would be less than the original.
• E) based on this information and because both changes would affect the demand for loanable funds in the opposite way,we would be unable to say anything about the relationship of the new equilibrium interest rate and quantity to the original interest rate and quantity.

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Definitions:

Muffins

Small, single-serving quick breads baked in portions appropriate for one person, often sweetened and flavored with various ingredients.

Brownies

A square or rectangular chocolate baked treat that's dense and can be either fudgy or cakey in texture.

Sodium Bicarbonate

A chemical compound with the formula NaHCO3, commonly known as baking soda, used in baking, cleaning, and antacid preparations.

Baking Soda

A white crystalline compound used in baking as a leavening agent, known chemically as sodium bicarbonate.