Econ 2305 Questions and Answers

*Decrease in equilibrium interest rate* and an *increase in the equilibrium quantity* of *loanable funds* could be explained by? Ans- The supply of loanable funds shifted *rightward* If the *supply for loanable funds shifts to the left*, then the equilibrium *interest rate*? Ans- *Rises* and the *quantity of loanable funds fall* Inflation Ans- an increase in the overall level of prices in the economy. CPI Ans- measures overall cost of Goods and Services brought by a tyical consumer CPI Equation STEP 1 Ans- Multiple quantity by price of both goods, add together, DO FOR EACH YEAR. CPI Equation STEP 2 Ans- Current/Base *100 *This number is used as CPI on inflation equation* Inflation Equation Ans- CPI Current Year-C