Figure 13-4

question 30

Multiple Choice

Figure 13-4. On the horizontal axis of the graph, L represents the quantity of loanable funds in billions of dollars.
-Refer to Figure 13-4. If the equilibrium quantity of loanable funds is $50 billion and if the equilibrium nominal interest rate is 8 percent, then

• A)there is an excess supply of loanable funds at a real interest rate of 6 percent.
• B)there is an excess demand for loanable funds at a real interest rate of 8 percent.
• C)the rate of inflation is approximately 2 percent.
• D)the rate of inflation is approximately 14 percent.

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Definitions:

Profitable

Describes a situation, venture, or entity that generates more revenue than the expenses incurred, resulting in financial gain.

Capital Account

In finance, a record of the financial transactions and investments between residents of a country and the rest of the world.

Capital Account

A national account that shows the net change in asset ownership for a country over a period of time.

Partnership Assets

Assets or property owned jointly by partners in a business partnership, used and managed for the benefit of the partnership.