If the Real Interest Rate Rises, Then the

question 27

Multiple Choice

If the real interest rate rises, then the

• A)supply of saving increases and the supply of loanable funds curve shifts rightward.
• B)supply of saving decreases and the supply of loanable funds curve shifts leftward.
• C)quantity of saving decreases and there is a movement down along the supply of loanable funds curve.
• D)demand for investment decreases and the demand for loanable funds curve shifts leftward.
• E)quantity of saving increases and there is a movement up along the supply of loanable funds curve.

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Definitions:

Inventory Value

The total cost or market value of all the goods and materials held by a company intended for sale.

Cash Position

The total amount of liquid assets or cash available to an individual, company, or institution at a given moment.

Demand Deposits

Demand Deposits are bank account funds that can be withdrawn at any time without any advance notice to the institution, such as checking accounts.

Forex

The market in which currencies are traded. It is the largest and most liquid financial market in the world.