-In the Figure Above, the DLF Curve Is the Demand

question 43

Multiple Choice

-In the figure above, the DLF curve is the demand for loanable funds curve and the PDLF curve is the private demand for loanable funds curve. If there is no Ricardo-Barro effect, the figure shows the situation in which the government has a ________ so that the equilibrium real interest rate is ________ and the equilibrium quantity of investment is ________.

• A) budget deficit; 4 per cent; $1 trillion
• B) budget surplus; 6 per cent; $1.5 trillion
• C) budget deficit; 6 per cent; $1.5 trillion
• D) balanced budget; 6 per cent; $1.5 trillion
• E) budget surplus; 4 per cent; $1 trillion

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Definitions:

Price Discriminate

The strategy of selling the same product to different customers at different prices based on willingness to pay, market segment, or conditions.

Profit-maximizing Monopolist

A monopolistic firm that determines its level of production and price by aiming to maximize its profits, where it faces no competition.

Units Produce

Units produced refer to the total count of items or goods manufactured or processed by a company or facility over a given time period.

Price Discriminate

A pricing strategy where a seller charges different prices for the same product or service to different consumers, based on their willingness to pay.