-In the Above Figure, the Initial Supply of Loanable Funds

question 184

Multiple Choice

-In the above figure, the initial supply of loanable funds curve is SLF₀ and the demand for loanable funds investment curve is DLF₀. An increase in the real interest rate to 7 percent could be caused by

• A) an increase in investment demand.
• B) a decrease in the expected profit.
• C) an increase in people's disposable incomes.
• D) an expansion that increased both saving and investment by the same amount.

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Definitions:

Useful Life

The estimated duration of time that an asset is expected to be usable for its intended purpose, affecting depreciation calculations.

Salvage Value

The conjectured remaining value of an asset at the close of its functional lifetime.

Discount Rate

This refers to the interest rate employed in DCF calculations to figure out the present value of upcoming cash flows.

Net Present Value

A financial measure that determines the net present value by subtracting the total outgoing cash flows from the incoming cash flows over a certain time period.