Which Statement Is NOT True of the Loanable Funds Theory

question 74

Multiple Choice

Which statement is NOT true of the loanable funds theory?

• A) Views the level of interest rates as resulting from factors that affect the supply and demand for loanable funds.
• B) Categorizes financial market participants as net suppliers or demanders of funds.
• C) Is a model that is rarely used to explain interest rates and interest rate movement.
• D) Is a theory of interest rate determination that views equilibrium interest rates in financial markets as a result of the supply and demand for loanable funds.

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Definitions:

Significant

Having a particularly important, notable, or consequential value or impact.

Persistent Annoyance

A continuous or recurring irritation that may affect one's performance, mood, or interactions negatively.

Self-serving Bias

A cognitive bias where individuals attribute their successes to internal factors and their failures to external factors.

Blindness of Involvement

The phenomenon where individuals become so engrossed in their own perspective or role that they are unable to understand or see the situation from another's viewpoint.