When the Actual Real Interest Rate Is Less Than the Equilibrium

question 161

Multiple Choice

When the actual real interest rate is less than the equilibrium real interest rate,

• A) the equilibrium real interest rate will rise.
• B) there are not enough loanable funds supplied for the quantity of loanable funds demanded.
• C) borrowers find it difficult to borrow.
• D) Both answers B and C are correct.

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Definitions:

Maximize Profit

The process of adjusting inputs and outputs in order to achieve the highest possible return on investment.

Total Revenue

The total income generated by a firm from its sales activity, calculated as the unit price of a good times the quantity of goods sold.

Profit Increase

The rise in the difference between a company's revenue and its expenses, indicating improved financial performance.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the total quantity produced, indicating the cost per unit of output.