-Suppose That the Initial Supply of Loanable Funds Curve Is

question 54

Multiple Choice

-Suppose that the initial supply of loanable funds curve is SLF₁. In the figure above, an increase in the real interest rate leads to
i. a shift in the supply of loanable funds curve from SLF₁ to SLF₂.
ii. a shift in the supply of loanable funds curve from SLF₁ to SLF3.
iii. a movement along the supply of loanable funds curve SLF₁.
iv. no change whatsoever.

• A) i only
• B) ii only
• C) iii only
• D) i and iii
• E) iv only

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Definitions:

Noncash Transaction

A transaction that does not involve the direct exchange of cash for goods or services, often involving bartering or trading.

Significant Noncash Activity

Transactions or activities that affect the financial statements of a company but do not involve cash inflow or outflow, such as depreciation or amortization.

Conversion of Bonds

The process where bondholders can exchange their bonds for a predetermined number of shares in the issuing corporation.

Plant Assets

Long-term tangible assets that are used in the operation of a business and are not intended for sale.