-In the Above Figure, If the Real Interest Rate Is

question 103

Multiple Choice

-In the above figure, if the real interest rate is 4 per cent, then

• A)there is a surplus of loanable funds.
• B)there is equilibrium in the loanable funds market.
• C)the demand curve for loanable funds will shift rightward.
• D)the real interest rate will rise.

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Definitions:

MPS

The marginal propensity to save, which is the fraction of additional income that is saved.

Disposable Income

The fiscal envelope for household spending and saving activity subsequent to income tax adjustments.

Consumption

The purchase and use of goods and services by households, considered a primary component of economic activity and an indicator of the economic health of a nation.

Saving

The act of not consuming all of one's income and instead holding onto it for future investments or expenditure needs.