If the Real Interest Rate Is Below the Equilibrium Real

question 59

Multiple Choice

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

• A)lenders will be unable to find borrowers willing to borrow all of the available funds and the supply of loanable funds curve shifts leftward.
• B)borrowers will be unable to borrow all of the funds they want to borrow and the demand for loanable funds curve shifts rightward.
• C)a shortage of of loanable funds exists, and the real interest rate rises.
• D)borrowers will be unable to borrow all of the funds they want to borrow and the demand for loanable funds curve shifts leftward.
• E)lenders will be unable to find borrowers willing to borrow all of the available funds and the supply of loanable funds curve shifts rightward.

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Definitions:

Bull Money Spread

An options strategy involving the purchase of a call option with a lower strike price and the sale of another call option with a higher strike price, aiming to profit from a moderate increase in the price of the underlying asset.

Calls

Financial derivative options that give buyers the right, but not the obligation, to buy a security at a specified price within a specified duration.

Option Position

An option position refers to an investment strategy involving the buying or selling of options, which are derivatives based on the value of underlying securities like stocks.

Call Contract

An agreement giving the buyer the right, but not the obligation, to buy a specified amount of an underlying asset at a set price within a specified time.