Question

The current economy is strong and many people are feeling confident about their future and ability to pay off debt. Because of this they are taking on more bank loans for things like new cars, renovating their homes, or buying new homes. Using the four step process with this type of market, what will banks most likely do with their loans?

They would to decrease the quantity supplied of loans and decrease the interest rate.

They would increase the supply of loans and decrease the interest rate.

They would increase the quantity supplied of loans and increase the interest rate.

What effect over the last decade, has the increasingly efficient and inexpensive technology of online college courses had on the college textbook market?

The supply for college textbooks has increased as a result there are fewer textbook publishing companies.

The demand for textbooks has declined resulting in publishing companies increasing their demand of textbook editor jobs.

The demand for physical textbooks have steadily decreased, and as a result more publishing companies are having less demand for high skilled textbook editor jobs. Online mortgage companies have been growing in numbers and size, and as a result, other things equal, traditional banks have to decrease the interest on their mortgage loans as the supply for all mortgage loans decreased. decrease the interest on their mortgage loans as the demand for traditional mortgage loans decreased. increase the interest on their mortgage loans as the demand for all mortgage loans increased. As the number of people holding college degrees increases, assuming the demand for college educated labor stays constant, the wages of college educated people would increase as the supply of college educated labor increases. increase as the demand for jobs increases. decrease as the supply of college educated labor increases.

Answer 1

1.

C

As per the law of supply, quantity of loans supplied will increase with increase in interest rate as demand for loans will increase.

2.

C

Due to lower demand of physical textbooks, companies don't demand high skilled textbook editors as these editors demand higher salaries.

3.

B

Online mortgage companies are able to attract consumers and posing tough competition to the traditional mortgage providers banks. So, these banks have to reduce the interest rate on mortgage loans.

4.

C

The demand is fairly constant, but supply of graduates is increasing. So, it will put downward pressure upon the wages paid to these graduates.

Answer 2