The Supply of Loanable Funds Increases While the Demand for Loanable

question 88

Multiple Choice

The supply of loanable funds increases while the demand for loanable funds remains constant.This would cause

• A) the equilibrium quantity of loanable funds to decrease and the equilibrium interest rate to increase.
• B) the equilibrium quantity of loanable funds to increase and the equilibrium interest rate to decrease.
• C) both the equilibrium quantity of loanable funds and the equilibrium interest rate to increase.
• D) the equilibrium interest rate to increase,leading to a new lower equilibrium quantity.
• E) the equilibrium interest rate to increase,but the equilibrium quantity of loanable funds would remain unchanged.

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Definitions:

Taxable Income

is the amount of income used to calculate how much tax an individual or a company owes to the government in a given tax year.

Federal Income Tax

A tax imposed by the federal government on personal and corporate income.

Warren Buffett

An American investor, business tycoon, philanthropist, and the chairman and CEO of Berkshire Hathaway, known for his successful investment strategies.

Average Tax Rate

The percentage of taxable income that is paid in taxes; taxes paid divided by taxable income.