If Consumers Expect to Have Shorter Life Expectancy and Desire

question 29

Multiple Choice

If consumers expect to have shorter life expectancy and desire to save less, then the

• A) demand for loanable funds will increase, and the equilibrium interest rate will increase.
• B) demand for loanable funds will decrease, and the equilibrium interest rate will decrease.
• C) supply of loanable funds will decrease, and the equilibrium interest rate will increase.
• D) the supply of loanable funds will increase, and the equilibrium interest rate will decrease.

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Definitions:

Least Squares

A mathematical method used in regression analysis to find the line of best fit for a set of data by minimizing the sum of the squares of the differences between the observed values and those predicted by the model.

Coefficient Of Correlation

A statistical measure that calculates the strength and direction of a linear relationship between two variables.

Coefficient Of Determination

A statistical measurement that assesses the proportion of variance in the dependent variable that is predictable from the independent variable(s), often denoted as R^2.

SSR

Sum of Squares due to Regression, a measure in statistics that quantifies the explanation of variance by the linear regression model.