-Refer to Figure 8-7

question 105

Multiple Choice

-Refer to Figure 8-7.What is the equilibrium interest rate in the above figure?

• A) 6% because that is where the total supply of funds equals the total demand.
• B) 5% because business and the government want to borrow as much as possible.
• C) 6% because that is where the amount of funds demanded is equal to the amount of funds demanded.
• D) 7% because households refuse to lend enough funds at a lower interest rate.
• E) 5% because households refuse to lend enough funds at a higher interest rate.

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Definitions:

Bargain Purchase

A transaction in which a buyer acquires assets, or occasionally a business, for a price considered to be significantly lower than the fair market value.

Intragroup Services

Services rendered by one entity within a larger corporate group to another entity within the same group.

Profit

The financial gain achieved when the amount of revenue gained from business activities exceeds the expenses, costs, and taxes involved in sustaining the activity.

Unrealised

Refers to profits or losses that have occurred on paper due to changes in value but have not been realized through an actual transaction.