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Exam questions - Chapters 5 and 6
In the market for loanable funds, we observe an increase in the interest rate and in total funds available in equilibrium. This could be explained by:
a reduction in fiscal deductions for investment.
an increase in government deficit.
a fall in income taxes that does not affect the government deficit.
an increase in savings.
Following a reduction in the budget deficit of a closed economy, the interest rate declines but the amount of loanable funds exchange is unaffected . What can we induce?
Supply of loanable funds is infinitely elastic
Supply of loanable funds is infinitely inelastic
Demand of loanable funds is infinitely inelastic
Demand of loanable funds is infinitely elastic
Currency in circulation is CHF 34 billions. Demand deposits (transaction accounts and sight deposits) are CHF 250 billion. Savings accounts are CHF 207 billions. Term accounts amount to CHF 97. Money supply M2 is:
34 billion
284 billion
491 billion
588 billion
If money supply decreases by CHF 20 millions, while the reserve requirement is 20%, this implies that the SNB:
sold securities for CHF 4 million.
bought US dollars for CHF 10 million.
sold US dollars for CHF 10 million.
bought securities for CHF 4 million.
Université de Genève
