The Quantity of Loanable Funds Demanded Increases If the Real

question 100

Multiple Choice

The quantity of loanable funds demanded increases if the real interest rate falls, all other things remaining the same, because the real interest rate

• A)determines the cost of living.
• B)affects the supply of saving which, in turn, determines the quantity of investment.
• C)affects the quantity of saving supplied.
• D)is not related to the price of bonds and stocks.
• E)is the opportunity cost of investment.

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Definitions:

Movement Along

Changes in the quantity demanded or supplied resulting from a change in price, illustrated by a movement along a demand or supply curve.

Policy Fairness

The extent to which a policy is considered just, equitable, and unbiased towards individuals or groups affected by it.

Model Assumptions

Fundamental suppositions upon which economic models and theories are based to simplify reality and facilitate analysis.

Curve Shift

A change in the position of a curve on a graph, indicating a shift in the relationship between two variables.