Therefore the quantity of loanable funds supplied increases

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1. What do real interest rates account for that nominal interest rates do not?

2. Because of its vast oil reserves, Saudi Arabia is a rich country. Saudi Arabia exemplifies the general fact that differences in___________ are responsible for some of the differences in standards of living around the world.

3. The level of real GDP is a good measure of economic prosperity, and the growth of real GDP is a good measure of __________.

4. Define GDP in your own words.

5. A higher interest rate makes more attractive. Therefore the quantity of loanable funds supplied increases.

6. A higher interest rate makes less attractive. Therefore the quantity of loanable funds demanded decreases.

7. How do banks make profits?

8. The financial system is important because it helps to match one person’s with another person’s _________.

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