Which of the Following Explains Why the Demand for Loanable

question 13

Multiple Choice

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

• A)Consumers are willing to spend less and hence save more at higher real interest rates.
• B)Interest rate flexibility in financial markets assures an equilibrium in which saving equals investment.
• 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.

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Definitions:

Hydroelectric

The production of electricity by converting the energy of flowing water into power, typically via dams.

Power Generation

The process of producing electricity from various energy sources such as fossil fuels, nuclear power, or renewable resources.

Nonrenewable Natural Resources

Natural resources, such as oil or coal, that cannot be replenished within a human lifetime, leading to depletion with use.

Natural Capital

The world's stock of natural resources, which includes geology, soils, air, water, and all living organisms, providing ecosystem services that benefit humans.