If the Interest Rate Were Below the Equilibrium Level, the Quantity

question 44

Multiple Choice

If the interest rate were below the equilibrium level, the quantity of loanable funds supplied would _____ the quantity demanded.

• A)be greater than
• B)exactly equal
• C)be less than
• D)be independent of

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Definitions:

Zero-Coupon Bonds

Bonds that don’t make periodic interest payments but are issued at a discount to their face value and redeemable for the face amount at maturity.

Expected Interest Rate

The anticipated rate at which interest is to be paid by a borrower for the use of money.

Municipal Bonds

Bonds issued by local government or municipalities, typically offering tax-exempt interest payments.

Corporate Bonds

Debt securities issued by corporations to raise capital, where the issuer promises to repay the borrowings plus interest.