Suppose That a Severe Shock That Decreases the Demand for Loanable

question 75

Multiple Choice

Suppose that a severe shock that decreases the demand for loanable funds hits Canada.Which of the following can we expect to occur according to real business cycle theory?

• A)People will work fewer hours.
• B)The real wage rate will fall.
• C)The demand for loanable funds will decrease.
• D)The real interest rate will fall.
• E)All of the above are true.

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Definitions:

Credit Memo

A document issued by a seller to a buyer, reducing the amount that the buyer owes to the seller under the terms of an existing invoice.

Bank Service Charges

Fees charged by banks for account services, transactions, and maintenance.

Credit Balances

The amounts that appear on the right side of a company's balance sheet accounts, typically indicating that a company has liabilities or has received payments in advance.

Creditors

Individuals or institutions that lend money or extend credit to others, expecting to be repaid.