28. Which of the following is true about the supply of loanable funds and interest rates when the government borrows money to finance its budget deficit?

A. The supply of loanable funds and the interest rate both increase. B. The supply of loanable funds decreases, and the interest rate increases. C. The supply of loanable funds decreases, but the interest rate remains unchanged. D. The supply of loanable funds increases, and the interest rate decreases. E. The supply of loanable funds remains unchanged, and the interest rate increases.

29. Which of the following is true about stocks as a liquid financial asset?

A. Stocks are always non-transferable. B. Stocks are not the same as equities. C. Stocks do not give ownership in a firm. D. Stocks do not have any resale value. E. Stocks give profits in the form of capital gains and dividends.

30. Which of the following will increase the productivity and economic growth of a nation?

A. Investment in education and training B. Increase in tax rates C. Restriction in imports D. Rise in prices E. Increase in national debt

31. If the nominal GDP of County Y is lower in year 2 than in year 1, which of the following must be true?

A. The real GDP of Country Y must be lower in year 2. B. The price level in Country Y must be lower in year 2 than in Year 1. C. There must have been inflation in Country Y from year 1 to year 2. D. The real GDP of Country Y or the price level of Country Y must be lower in year 2 than in year 1. E. The real GDP and the price level could both have increased from year 1 to year 2.

32. Assume that the inflation-adjusted interest rate is 4% and that the expected rate of inflation is 5%. What is the interest rate charged by banks on loans?

A. -1% B. 1% C. 4% D. 5% E. 9%