Refer to the Figure Below to Answer the Following Questions

question 101

Multiple Choice

Refer to the figure below to answer the following questions.
Figure 7.2.3
-In Figure 7.2.3, the real interest rate is 6 percent a year and the economy is on curve DLF.The expected profit falls.With no change in the real interest rate, the new quantity of loanable funds demanded is

• A)zero.
• B)between $450 billion and $600 billion.
• C)greater than $600 billion.
• D)less than $450 billion.
• E)$450 billion.

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Definitions:

Coffee

A beverage made from the roasted and ground beans of the Coffea plant, consumed worldwide for its stimulating effects.

Income Effect

A phenomenon where changes in an individual's income lead to changes in the quantity demanded of a good or service.

Substitution Effect

The economic principle that as the price of a good increases, consumers will replace it with less expensive alternatives.

Normal Good

A product that sees an increase in demand as people's incomes increase, and a decrease in demand when their incomes decrease.