In the Real Intertemporal Model, an Increase in Credit Market

question 52

Multiple Choice

In the real intertemporal model, an increase in credit market risk implies

• A) output demand shifts left and output supply shifts right, increasing the real interest rate.
• B) output demand shifts right and output supply shifts left, the real interest rate is constant.
• C) output demand shifts left and output supply shifts left, decreasing the real interest rate.
• D) output demand shifts left and output supply is constant, increasing the real interest rate.
• E) output demand shifts left and output supply shifts right, decreasing the real interest rate.

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