International Finance And Treasury - Study Mode

[#266] According to loanable funding theory, net suppliers of funds are
Correct Answer

(D) households

Explanation

Solution: According to loanable funding theory, net suppliers of funds are households. According to this approach, the interest rate is determined by the demand for and supply of loanable funds. The term loanable funds includes all forms of credit, such as loans, bonds, or savings deposits.

[#267] Funds provided by suppliers of funds in financial markets are classified as
Correct Answer

(C) supply of loan-able funds

Explanation

Solution: Funds provided by suppliers of funds in financial markets are classified as supply of loan-able funds. The supply of loanable funds is based on savings. The demand for loanable funds is based on borrowing. The interaction between the supply of savings and the demand for loans determines the real interest rate and how much is loaned out.

[#268] If there is improve in economic condition in foreign countries, local community of investors start
Correct Answer

(A) investing abroad

Explanation

Solution: If there is improve in economic condition in foreign countries, local community of investors start investing abroad.

[#269] Participants of financial system reduce demand for their funds if economic growth in
Correct Answer

(A) domestic market is stagnant

Explanation

Solution: Participants of financial system reduce demand for their funds if economic growth in domestic market is stagnant. A financial system is the set of global, regional, or firm-specific institutions and practices used to facilitate the exchange of funds. Financial systems can be organized using market principles, central planning, or a hybrid of both.

[#270] Equilibrium interest rate increases and economic conditions decreases then supply curve must shift to
Correct Answer

(C) up and to left

Explanation

Solution: Equilibrium interest rate increases and economic conditions decreases then supply curve must shift to up and to left. The equilibrium interest rate is the rate at which the quantity of money demanded is equal to the quantity of money supplied. The Federal Reserve can alter the equilibrium interest rate by adjusting the supply of money. The demand for money and supply of money can be graphed to determine the equilibrium interest rate.