Chapter 10

Question 1

loanable funds market

Answer 1

savers (investors) supply funds to loan borrowers

Question 2

market of loanable funds

Answer 2

matches borrowers with savers, provides risk sharing, provides liquidity, and provides information

Question 3

GDP equation

Answer 3

Y = C + I + G + NX

Question 4

factors that shift the supply of loanable funds

Answer 4

income and wealth, time preferences, and consumption smoothing

Question 5

factors that shift the demand of loanable funds

Answer 5

productivity of capital, investor confidence, and fiscal policies

Question 6

expansions

Answer 6

demand for products is high relative to supply, resulting in increasing prices and high inflation

Question 7

recessions

Answer 7

demand for products is low relative to supply, resulting in slowly increasing prices and low inflation, maybe even decreasing

Question 8

long run economic growth

Answer 8

the process by which rising productivity increases the average standard of living

Question 9

economic growth

Answer 9

percentage change in real GDP per capita

Question 10

labor productivity

Answer 10

the quantity of goods/services that can be produced by one worker or in one hour