If the Real Interest Rate Increases from 3 Percent to 5

question 115

Multiple Choice

If the real interest rate increases from 3 percent to 5 percent,

• A) the supply of loanable funds curve will shift rightward.
• B) the demand for loanable funds curve will shift rightward.
• C) the nominal interest rate will also increase.
• D) there will be a movement up along the demand for loanable funds curve.

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Definitions:

Gross Domestic Product (GDP)

The complete market or financial worth of every finished good and service made within a nation's frontiers in a certain timeframe.

Consumer Price Index (CPI)

A metric that calculates the mean variation over time in the costs incurred by urban buyers for a selection of consumer products and services.

Inflation Rate

The percentage increase in the price level of goods and services in an economy over a period of time.

Purchasing Patterns

The habits or trends that emerge among consumers regarding how they buy goods or services over time.