Answer the Question Based on the Information in the Table

question 233

Multiple Choice

$$\begin{array} { | c | c | c | c | } \hline \text { Money Supply } & \text { Money Demand } & \text { Interest Rate } & \begin{array} { c } \text { Investment (at Interest } \\\text { Rate Shown) }\end{array} \\\hline \$ 400 & \$ 600 & 2 \% & \$ 700 \\\hline \$ 400 & 500 & 3 & 600 \\\hline \$ 400 & 400 & 4 & 500 \\\hline \$ 400 & 300 & 5 & 300 \\\hline \$ 400 & 200 & 6 & 200 \\\hline\end{array}$$
Answer the question based on the information in the table. An interest rate of 2 percent is not sustainable because

• A) the demand for bonds in the bond market will fall and the interest rate will fall.
• B) the demand for bonds in the bond market will rise and the interest rate will fall.
• C) the supply of bonds in the bond market will decline and the interest rate will rise.
• D) the supply of bonds in the bond market will rise and the interest rate will rise.

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Definitions:

Loanable Funds

The capital available for borrowing, determined by the supply of savings and the demand for investment within an economy.

Loanable Funds

Money available for borrowing, which consists of savings that banks and other financial institutions can lend to businesses and individuals.

Policy Change

A policy change refers to alterations made to existing laws, regulations, or guidelines by governments, institutions, or organizations, aiming to address specific issues or improve outcomes.

Loanable Funds

The funds available in the financial markets for borrowing, influenced by interest rates, savings, and investments.