For an Imaginary Economy,when the Real Interest Rate Is 7

question 119

Multiple Choice

For an imaginary economy,when the real interest rate is 7 percent,the quantity of loanable funds demanded is $500 and the quantity of loanable funds supplied is $500.Currently,the nominal interest rate is 9 percent and the inflation rate is 4 percent.Currently,

• A)the market for loanable funds is in equilibrium.
• B)the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded,and as a result the real interest rate will rise.
• C)the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded,and as a result the real interest rate will fall.
• D)the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied,and as a result the real interest rate will rise.

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Definitions:

Accurate

The quality of being precise, correct, and free of errors in information, measurements, or outcomes.

Positive

Refers to something that is good, beneficial, or constructive, often leading to favorable outcomes or expressions of optimism.

Consistent

Showing steady conformity to the same principles, course, form, or actions over time.

Approach-approach Conflict

A psychological dilemma occurring when an individual faces two equally desirable but mutually exclusive goals or options.