Suppose the market for loanable funds is in equilibrium. If the ...

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Suppose the market for loanable funds is in equilibrium. If the expected profit falls, the equilibrium real interest rate ________ and the quantity of loanable funds ________.
 
  A) falls; decreases
  B) falls; increases
  C) rises; increases
  D) rises; decreases

Question 2

An observer of the economy notices that over the past 12 months the unemployment rate has fallen from 7.0 percent to 6.5 percent. During the same time, the rate of growth in real GDP has been positive. From this information we might conclude that
 
  A) inflation is not occurring.
  B) an expansion is occurring in the economy.
  C) a recession is in progress.
  D) a trough in the business cycle will soon be reached.

[adammoses97]

Answer to Question 1

A

Answer to Question 2

B

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Excellent

[bigsis44]

TYSM