The total demand for loans is equal to a. demand by firms for investment, plus saving demand. The Fisher equation shows the relationship between a. nominal and real interest rates. An increase in the real interest rate would be expected to a. increase consumption spending. The negative impact that an increase in government borrowing has on investment spending is called a. crowding out. If you hear a car dealer advertising an interest rate of 3 percent on new car loans, the 3 percent is a. the real interest rate.
Economic growth is a rise in a. real GDP per person.
The rule of 72 says that if the growth rate of a variable is X percent per year, then the variable doubles after about years. A long-run equilibrium in which capital per person remains constant is called a. balanced growth. The basic model of economic growth without technical progress shows that an economy grows when a. capital per person is below its steady state level. Problems, show all work and completely label all graphs, points are in parentheses after the question a. Suppose the government balances its budget, and that there is a fall in consumer confidence.