macroeconomics topic 11

If a bond promises a payment of $200 and the interest rate is 3%, then the price of the bond is: $206.2. $194.2. $197. $206.

$194.2.

If a bond has a promised value next year of $440 and the interest rate is 10 percent, then the price of a bond today is: $44. $400. $444.4. $484.

$400.

Which choice is true? A higher interest rate causes lower investment, higher demand, and higher real GDP. A lower interest rate causes lower investment, higher demand, and higher real GDP. A higher interest rate causes higher investment, lower demand, and lower real GDP. A higher interest rate causes lower investment, lower demand, and lower real GDP

A higher interest rate causes lower investment, lower demand, and lower real GDP

Why does the supply of loanable funds slope upward ? As the interest rate rises, individuals tend to save less. As the interest rate rises, individuals tend to save more. Interest rates do not impact the supply of loanable funds. Higher interest rates tend to result in more borrowing.

As the interest rate rises, individuals tend to save more.

In the loanable funds market, if firms believe that their future sales will fall, the real interest rate will_____ and quantity of investment will_______. increase; increase increase; decrease decrease; increase decrease; decrease

decrease; decrease

Recently, the economies of China and India have begun to grow very rapidly. This increases the income and wealth of their citizen. In turn, these citizens increase their savings in their country and also in the US. In the US loanable funds market, the real interest rate will_____ and quantity of investment will_______. increase; increase increase; decrease decrease; increase decrease; decrease

decrease; increase

Suppose that a new law significantly limits foreign ownership of US Treasury bonds. The price of US Treasury bonds will ______ and the interest rates on Treasury bond will __________. increase; increase increase; decrease decrease; increase decrease; decrease

decrease; increase

Investment spending: is inversely related to the money supply. is independent of either the interest rate or money supply. increases as the interest rate increases. decreases as the interest rate increases.

decreases as the interest rate increases.

The price of a bond is equal to: past value / (1 + interest rate). future payment / (1 + interest rate). future payment / (1 - interest rate). past value / (1 - interest rate).

future payment / (1 + interest rate).

Research shows that watching the cartoon SpongeBob SquarePants can shorten a Child's attention span. Now assume that an entire generation grows up watching this cartoon and becomes less patient, or their time preference increase. In the loanable funds market, the real interest rate will_____ and quantity of investment will_______. increase; increase increase; decrease decrease; increase decrease; decrease

increase; decrease

When the economy is in a boom, the interest rates ________ and the bond prices ________. increase; decrease decrease; decrease increase; increase decrease; increase

increase; decrease

Suppose a new technology leads to greater capital productivity. In the loanable funds market, the real interest rate will_____ and quantity of investment will_______. increase; increase increase; decrease decrease; increase decrease; decrease

increase; increase

Generally speaking, investment ________ when real GDP ________. increases; decreases decreases; increases increases; increases does not change; increases or decreases

increases; increases

The price in the loanable funds market is: the rate of return of a project. the price level. the interest rate. the consumer price index.

the interest rate.