When Saving (The Supply of Loanable Funds) Increases as the Interest

question 138

Multiple Choice

When saving (the supply of loanable funds) increases as the interest rate increases, an increase in investment demand results in a ______ interest rate and ______ in the quantity of investment.

• A) higher; no change
• B) higher; an increase
• C) lower; no change
• D) lower; an increase

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Definitions:

Fair Value

The estimated market value of an asset or liability in an arm's length transaction between informed and willing parties.

Investment Income

Income received from the assets invested in, such as dividends, interest, or rental income.

Common Stock

Shares of ownership in a corporation that grant holders voting rights and a share of the company’s profits through dividends.

Long-Term Investment

Investments a company intends to hold for more than one year, typically including stocks, bonds, or real estate.