Which of the Following Statements Is Correct

question 29

Multiple Choice

Which of the following statements is correct?

• A) The long-run real interest rate varies directly with changes in non-interest sensitive components of aggregate demand and inversely with potential output.
• B) The long-run real interest rate varies inversely with changes in non-interest sensitive components of aggregate demand and inversely with potential output.
• C) The long-run real interest rate varies directly with changes in non-interest sensitive components of aggregate demand and directly with potential output.
• D) The long-run real interest rate varies directly with changes in non-interest sensitive components of aggregate demand and does not vary with potential output.

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Definitions:

Financial Markets

Marketplaces where people trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand.

Financialization

The increasing importance and dominance of financial markets, financial motives, financial institutions, and financial elites in the economy.

Global Strategy

A comprehensive plan developed by businesses or organizations to operate and compete on an international scale.

Coordination

The organization of different elements or activities in a systematic way to ensure efficient operation and achieve desired outcomes.