Suppose the Current Real Interest Rate Is 4 Percent and the Equilibrium

question 51

Multiple Choice

Suppose the current real interest rate is 4 percent and the equilibrium real interest rate is 3 percent. Then

• A) there is a shortage of loanable funds.
• B) there is neither a shortage nor surplus of loanable funds.
• C) prices rise and inflation occurs.
• D) there is a surplus of loanable funds.

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Definitions:

Culture

The shared values, beliefs, norms, customs, arts, history, folklore, and institutions of a group of people that are transmitted from one generation to another.

Information Processing Perspective

A theory in psychology that likens the human mind to a computer, focusing on how information is taken in, used, and stored.

Efficiency

Relates to the degree of effectiveness with which resources (time, money, effort) are utilized to achieve a goal or perform a task.

Speed of Thought

The rapidness with which one can process information, make decisions, and formulate ideas.