If the Real Interest Rate Is Above the Equilibrium Real

question 1

Multiple Choice

If the real interest rate is above the equilibrium real interest rate,

• A)lenders are unable to find borrowers willing to borrow all of the available funds and the real interest rate rises.
• B)a shortage of loanable funds exists.
• C)lenders are unable to find borrowers willing to borrow all of the available funds and the real interest rate falls.
• D)borrowers are unable to borrow all of the funds they want to borrow and the real interest rate rises.
• E)borrowers are unable to borrow all of the funds they want to borrow and the real interest rate falls.

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Definitions:

Contribution Margin

The sales price minus the variable costs of a product, indicating how much selling one more unit adds to profit.

Variable Costs

Costs that vary directly with the level of production or volume of output, such as raw materials and direct labor.

Fixed Costs

Costs that remain constant regardless of the volume of goods or services produced by a business.

Net Income

The total profit of a company after operating expenses, taxes, and all other incomes and expenses have been deducted from total revenue.