Author Question: Suppose firms become more optimistic about the economy's ability to avoid a recession and hence the ... (Read 73 times)

Alainaaa8 · **on:** Jun 29, 2018

Suppose firms become more optimistic about the economy's ability to avoid a recession and hence the expected profit increases. As a result, the demand for loanable funds curve shifts ________ and the real interest rate ________.

A) leftward; rises
B) rightward; rises
C) rightward; does not change
D) leftward; falls
E) rightward; falls

Question 2

According to Okun's Law, if the unemployment rate is 7 percent and the natural unemployment rate is 5 percent, potential GDP is ________ than real GDP.

A) 2 percent greater
B) 7 percent less
C) 2 percent less
D) 4 percent less
E) 4 percent greater