Author Question: In the above figure, the demand for loanable funds curve is drawn for the average expected profit. ... (Read 111 times)

plus1 · **on:** Jun 29, 2018

In the above figure, the demand for loanable funds curve is drawn for the average expected profit. If the real interest rate is constant at 6 percent and the expected profit rises, the amount of loanable funds demanded will be

A) less than 450 billion.
B) 450 billion.
C) between 300 billion and 450 billion.
D) greater than 450 billion.

Question 2

Suppose you cash in a Certificate of Deposit (a small time deposit) to acquire the traveler's checks you'll need for your vacation. What happens to M1 and M2?

A) M1 and M2 both increase.
B) M1 stays the same and M2 increases.
C) M1 increases and M2 decreases.
D) M1 increases and M2 stays the same.