Suppose the Real Interest Rate Rises and the Quantity of Loanable

question 23

Multiple Choice

Suppose the real interest rate rises and the quantity of loanable funds decreases. These changes could have been the result of

• A) firms expecting higher future profits.
• B) an increase in household wealth.
• C) a decrease in the default risk.
• D) an increase in disposable income.

---

Definitions:

Convertibility

The ease with which one currency can be exchanged for another, indicating how freely a country's currency can be traded on the international market.

Tax Levied

Refers to the imposition of taxes by a governing authority on individuals, corporations, or properties to generate revenue for public expenditures.

Quota

A government-imposed trade restriction that limits the number or monetary value of goods that can be imported or exported during a specific time frame.

Tariff

Tariff is a tax imposed by a government on goods and services imported from other countries to protect domestic industries or generate revenue.