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to kill a mocking bird
Instructions: Multiple Choice Questions: Each of the multiple choice questions or incomplete statements below is followed by suggested answers or completions. Select the one that is best in each case.

Free Response Questions: Respond to the questions in the text boxes provided. In answering questions, you should emphasize the line of reasoning that generated your results; it is not enough to list the results of your analysis. Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. Clearly label each part of the answer. Only text that is included in the text boxes will be scored. Diagrams, if required, should be sent to your instructor via e-mail or fax.

Answer Key

Question 1 (Worth 15 points)
Suppose productivity in Happyland increases. Using a correctly labeled loanable funds graph, show and explain how the increase in productivity will affect the loanable funds market in Happyland.
a. Explain how the change in interest rates will affect each of the following.
i. capital investment ii. Long-term economic growth
b. Explain how the change in interest rates will affect the international value of Happyland’s dollar.

ESSAY SUBMISSION
a. i. Capital investment will increase because companies will want to invest because there will be an increased expected return on the investment. 
ii. Interest rates are lower, so there will be more capital investment, thus more productivity. 
b. The dollar will decrease because the interest rates have decreased and foreign investors will not want to invest in Happyland because they would receive a lower return.

ESSAY FEEDBACK
For some reason I did not receive your graphs. It is easier to score the assessment when your graphs are with the explanation in case there are consistency points I can award. When you send them, I will score the question and add in the points. Mrs.
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