One of the reactions of Bulgarian households to the raging economic crisis during 2008-2010 was to significantly increase their savings. As a result for 2011 the domestic savings were about 10 percentage points higher than before the crisis. Please address the following questions:

Ceteris paribus, this change in the behavior of Bulgarian households leads to a change in the structure of GDP by expenditure components. The share of which component certainly decreases?

a. household consumption

b. investment

c. government consumption

d. net exports

Ceteris paribus, this change in the behavior of Bulgarian households leads to a change in the structure of GDP by expenditure components. The share of which component increases almost certainly?

a. household consumption and government consumption

b. investment and net exports

c. household consumption and investment

d. government consumption and net exports

Ceteris paribus, this change leads to changes on the market for loanable funds. In what direction does the supply of loanable funds curve shift and why?

a. left, because savings are a source of loanable funds and they increase

b. right, because savings are a source of loanable funds and they increase

c. left, because increased savings increase the incentives to invest

d. right, because increased savings increase the incentives to invest

e. it will not shift, because this curve is not affected by household behavior

Ceteris paribus, this change leads to changes on the market for loanable funds. In what direction does the demand of loanable funds curve shift and why?

a. left, because savings are a source of loanable funds and they increase

b. right, because savings are a source of loanable funds and they increase

c. left, because increased savings increase the incentives to invest

d. right, because increased savings increase the incentives to invest

e. it will not shift, because this curve is not affected by household behavior

Ceteris paribus, this change leads to changes on the market for loanable funds. Compared to the situation before the change, in the new equilibrium interest rates will be __________ and the amount of loanable funds exchanged will be __________?

a. lower; larger

b. higher; larger

c. lower; smaller

d. higher; smaller

If we accept that this change is permanent and the domestic rate of saving increases forever, how will this affect the main components of the production function for the Bulgarian economy?

a. it will increase the labor resource

b. it will increase the capital resource

c. it will increase the available natural resources

d. it will increase both the labor and capital resources

e. it will increase all components of the production function

If we accept that this change is permanent and the domestic rate of saving increases forever, how will this affect the long run well-being in Bulgaria?

a. it will decrease

b. it will not change

c. it will increase

d. the information provided is insufficient to answer the question