19. If the real interest rate is 5 percent and the rate of inflation is 2 percent, then the nominal interest rate is a. 3 percent. b. 7 percent. c. 2.5 percent. d. 4 percent. Ringer 20. If the demand forloanable funds shifts to the right, then the equilibrium interest rate a. and quantity of oanable funds rise. b. and quantity of loanable funds fall c. rises and the quantity of loanable funds falls. d. falls and the quantity of loanable funds rises 21. We associate the term debt finance with a. the bond market, and we associate the term equity finance with the stock market. b. the stock market, and we associate the term equity finance with the bond market. c. financial intermediaries, and we associate the term equity finance with financial markets. d. financial markets, and we associate the term equity finance with financial intermediaries 22. A budget surplus is created if a. the government sells more bonds than it buys back. b. t he government spends more than it receives in tax revenue c. private saving is greater than zero d. None of the above is correct. 23.What would happen in the market for loanable funds if the government were to increase the tax on interest income? a. The supply of loanable funds would b. The demand for loanable funds would c. The supply of loanable funds would d. The demand for loanable funds would shift right. shift right. shift left shift left 24. If a production function has increasing returns to scale, output can be more than doubled if a. labor alone doubles. b. all inputs but labor double c. all of the inputs double d. None of the above is correct. 25. If an American-based firm opens and operates a new shirt factory in Bangladesh, then it is engaging iin a. foreign portfolio investment. b. foreign financial investment c. foreign direct investment d. indirect foreign investment