11
BIU
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5. Suppose that the tires of a certain tire manufacturer are discovered to be more lasting than
other brands. Other things the same, this news would cause
ANS:
a the demand for this company's stock to increase, so the price would rise.
b. the demand for this company's stock to decrease, so the price would fall
c. the supply of this company's stock to decrease, so the price would fall.
d. the supply of this company's stock to decrease, so the price would rise.
6. If there is a shortage of loanable funds, then
ANS:
a the quantity of loanable funds demanded is greater than the quantity of loanable
funds supplied and the interest rate is above equilibrium
b. the quantity of loanable funds demanded is greater than the quantity of loanable
funds supplied and the interest rate is below equilibrium
c. the quantity of loanable funds supplied is greater than the quantity of loanable
funds demanded and the interest rate is above equilibrium
d the quantity of loanable funds supplied is greater than the quantity of loanable
funds demanded and the interest rate is below equilibrium