Question 1
An economy's upward-sloping supply curve of desired saving is usually plotted with ________ on the vertical axis.
◦ technology
◦ the general price level
◦ capital stock
◦ the price of capital
◦ the market interest rate
Question 2
A firm's demand for physical capital leads to its ________ and a household's supply of saving leads to its ________.
◦ demand for financial capital; supply of financial capital
◦ demand for bonds; supply of bonds
◦ demand for stocks; supply of stocks
◦ lending behaviour; borrowing behaviour
◦ negative effect on the interest rate; positive effect on the interest rate