Figure 26-4

question 51

Multiple Choice

Figure 26-4.On the horizontal axis of the graph,L represents the quantity of loanable funds in billions of dollars.
-Refer to Figure 26-4.If the equilibrium quantity of loanable funds is $56 billion and if the rate of inflation is 5 percent,then the equilibrium nominal interest rate is

• A)11 percent.
• B)approximately 6 percent.
• C)between 6 percent and 8 percent.
• D)between 11 percent and 13 percent.

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Definitions:

Price Discrimination

A pricing strategy where identical or substantially similar goods or services are sold at different prices by the same provider in different markets or to different customers.

Perfect Competition

A market structure characterized by a large number of small firms, a homogeneous product, freedom of entry and exit, and perfect information, leading to firms being price takers.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing the benefit to consumers.

Natural Monopoly

A market condition where due to high fixed costs or unique resources, a single firm can supply a good or service to an entire market at a lower cost than what two or more firms could.