Suppose a Country Has a Smaller Increase in Debt in 2012

question 170

Multiple Choice

Suppose a country has a smaller increase in debt in 2012 than it had in 2011.Then other things the same,

• A) the supply of loanable funds shifts and the interest rate falls.
• B) the supply of loanable funds shifts and the interest rate rises.
• C) the demand for loanable funds shifts and the interest rate falls.
• D) the demand for loanable funds shifts and the interest rate rises.

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Definitions:

Present Value

The present worth of a future amount of money or series of cash flow at a given return rate.

Payable

This term refers to an amount of money that is due to be paid.

Compounded Annually

Interest on an investment that is calculated once a year, where the interest earned each year is added to the principal.

Loan Principal

The initial amount of money borrowed in a loan, excluding interest and other charges.