Which of the Following Explains Why the Demand for Loanable

question 56

Multiple Choice

Which of the following explains why the demand for loanable funds is negatively related to the real interest rate?

• A) A lower real interest rate makes more investment projects profitable.
• B) Interest rate flexibility in financial markets assures an equilibrium in which saving equals investment.
• C) Consumers are willing to spend less and hence save more at higher real interest rates.
• D) All of the above are reasons why the demand for loanable funds is negatively related to the real interest rate.

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Obscure

Not discovered or known about; uncertain and not clear or easily understood.

Vague

Vague describes something that is unclear, indistinct, or not precisely defined, often leading to ambiguity or misunderstanding.

Differentia

A characteristic that distinguishes a thing or a concept from others within the same group or category.

Tricycle

A vehicle similar to a bicycle, but with three wheels (two at the back and one at the front), often used by young children or for specialized utility purposes.