Which of the Following Explains Why the Demand for Loanable

question 54

Multiple Choice

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

• A)Interest rate flexibility in financial markets assures an equilibrium in which saving equals investment.
• B)Consumers are willing to spend less so they save more at higher real interest rates.
• C)A lower real interest rate makes more investment projects profitable.
• D)All of the above are reasons why the demand for loanable funds is negatively related to the real interest rate.
• E)None of the above are reasons why the demand for loanable funds is negatively related to the real interest rate.

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Definitions:

Franchise

Contractual agreement in which a franchisee gains the right to produce and/or sell the franchisor’s products under that company’s brand name if they agree to certain operating requirements.

Mall

A large enclosed shopping area with a variety of stores and services in one or more buildings, providing a central location for consumers to shop.

Place Utility

The value added to products by having them where they are needed or wanted by consumers, thus enhancing customer satisfaction.

Location

Refers to a specific geographical place or position where something exists or occurs.