The Graph Shows Saving Supply and Investment Demand Curves

question 87

Multiple Choice

The graph shows saving supply and investment demand curves. In panel A, saving represents the supply of loanable funds. In Panel B, investment represents the demand for loanable funds. What is NOT true about these curves?

• A) An increase in interest rates increases the quantity of saving supplied.
• B) The quantity of saving is negatively related to the interest rate.
• C) A decrease in interest rates increases the quantity of investment demanded.
• D) The quantity of investment is negatively related to the interest rate.

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Definitions:

One-sided

A term used in hypothesis testing to describe a test where the alternative hypothesis specifies a direction of the difference or effect.

Alternative Hypothesis

A hypothesis that suggests there is a statistically significant effect or difference between two or more variables or groups.

Average Amount

The sum of values divided by the number of values, representing a central or typical value in a set of data.

Sleep

A naturally recurring state of rest for the mind and body, characterized by altered consciousness and reduced interactions with surroundings.