Suppose the Real Interest Rate Rises and the Quantity of Loanable

question 41

Multiple Choice

Suppose the real interest rate rises and the quantity of loanable funds decreases. These changes could have been the result of

• A)an increase in household wealth.
• B)a decrease in the default risk.
• C)an increase in disposable income.
• D)firms expecting higher future profits.

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Definitions:

Incomes

Refers to money received, especially on a regular basis, for work or through investments.

Capital Flight

The rapid movement of large sums of money or assets out of a country due to economic or political instability.

Industrial Advanced Countries (IACs)

Countries characterized by high levels of industrialization, technological advancement, and economic development.

Skilled Workers

Employees who have specialized training, expertise, or qualifications that allow them to perform complex job tasks.