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:

Income Summary

An account used in the closing process that summarizes revenues and expenses for a period before transferring the net income to retained earnings.

General Ledger

A complete record of all financial transactions over the life of a company, organized into debits and credits across various accounts.

Capital Account

An account showing the net changes in property ownership and transfer of payment among countries for international transactions, or in a company's context, represents the stake of owners in the firm.

Revenue Accounts

Accounts that record the income generated from the sale of goods and services, before any expenses are subtracted.