Exam 2: Determination of Interest Rates

The federal government's demand for funds is ________, and municipal governments' demand for funds is ____________.

If interest rates are ____, ____ projects will have expected returns that exceed a business's particular required rate of return.

At any given point in time, households would demand a ____ quantity of loanable funds at ____ rates of interest.

Which of the following is a valid representation of the Fisher effect?

If economic conditions become less favorable, then

The equilibrium interest rate should

When Japanese interest rates rise, and exchange rate expectations remain unchanged, the most likely effect is that the supply of loanable funds provided by Japanese investors to the United States will ____, and U.S. interest rates will ____.

The equilibrium interest rate

The required return to implement a given business project will be ____ if interest rates are lower. This implies that businesses will demand a ____ quantity of loanable funds when interest rates are lower. ​

The expected impact of an increased expansion by businesses is an ____ shift in the demand schedule and ____ in the supply schedule. ​

If the aggregate demand for loanable funds increases without a corresponding ____ in aggregate supply, there will be a ____ of loanable funds. ​

At any point in time, households and businesses demand a greater quantity of loanable funds at lower rates of interest.

If foreign interest rates fall, foreign firms and governments would likely reduce their demand for U.S. funds.

The crowding-out effect occurs when

According to the Fisher effect, when the inflation rate is lower than anticipated, the real interest rate is relatively low.

The quantity of loanable funds supplied is normally

If the real interest rate was negative for a period of time, then

Canada and the United States are major trading partners. If Canada experiences a major increase in economic growth, that could place ____ pressure on Canadian interest rates and ____ pressure on U.S. interest rates. ​

Assume that foreign investors who have invested in U.S. securities decide to increase their holdings of U.S. securities. This should cause the supply of loanable funds in the United States to ____ and should place ____ pressure on U.S. interest rates. ​

The ____ suggests that the market interest rate is determined by factors that control the supply of and demand for loanable funds.