When There Is a Fixed Supply of Loanable Funds, an Increase

question 68

Multiple Choice

When there is a fixed supply of loanable funds, an increase in investment demand results in a(n) :

• A) higher interest rate.
• B) lower interest rate.
• C) increase in investment.
• D) decrease in investment.

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Definitions:

Foot-in-the-Door Effect

A psychological phenomenon where agreeing to a small request increases the likelihood of agreeing to a larger request later.

Proximity

In psychology, the closeness or physical distance between people that significantly affects attraction and relationship formation; in visual perception, a principle that elements close to one another are perceived as a coherent group.

Physical Attractiveness

The degree to which a person's physical features are considered aesthetically pleasing or beautiful by others.

Similarity

The degree to which two or more things resemble each other in terms of attributes, characteristics, or qualities.