If at a Given Real Interest Rate Desired National Saving

question 225

Multiple Choice

If at a given real interest rate desired national saving were $140 billion, domestic investment were $90 billion, and net capital outflow were $40 billion, then at that real interest rate in the loanable funds market there would be a

• A)surplus; the real interest rate would rise.
• B)surplus; the real interest rate would fall.
• C)shortage; the real interest rate would rise.
• D)shortage; the real interest rate would fall.

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Definitions:

Decision-Making Processes

Processes through which individuals or organizations make choices among alternative courses of action to achieve their objectives.

Scarcity

A fundamental economic problem of having seemingly unlimited human wants in a world of limited resources, leading to the necessity of prioritizing resource allocation.

Production Possibility Curve

A graphical representation showing the maximum combination of goods and services that can be produced in a given period with available resources.

Opportunity Cost

The expense incurred by not choosing the second-best option when making a decision.