AP Macroeconomics - Loanable Funds

The loanable funds market is best described as bringing together

savers and borrowers

Which of the following will increase the supply of loanable funds?

An increase in household saving

If investors feel that business conditions will deteriorate in the future, the demand for loans and real interest rate in the loanable funds market will change in which of the following ways in the short run?

Demand for Loans - Decrease, Real Interest Rate - Decrease

An increase in investment demand for capital goods accompanied by an increase in household savings will result in which of the following in the market for loanable funds?

The equilibrium quantity of loanable funds will increase, but the impact on the real interest rate is indeterminate.

Which of the following changes would most likely cause an increase in interest rates in the short run?

An increase in government spending financed by borrowing

When there is excess demand in the loanable funds market, which of the following will occur?

Real interest rates will increase.

An increase in the demand for loanable funds could be best explained by which of the following?

Firms are optimistic about the future performance of the country’s economy.

Which of the following will cause an increase in the equilibrium real interest rate?

An increase in investment demand

Which of the following is most likely to increase the real interest rate in Country Z ?

Country Z is viewed as having increased political and economic risk.

In the country of Peirce, government spending decreased while the level of private savings increased. How will these changes affect the real interest rate and interest-sensitive spending in the short run?

The real interest rate will decrease, and interest-sensitive spending will increase.