The Market Interest Rate Is Determined by Saving Supply and Investment

question 51

Multiple Choice

The market interest rate is determined by saving supply and investment demand, as shown in the graph. If the interest rate changes such that the amount of money supplied moves from point 4 to point 2, how would the amount of money demanded change?

• A) quantity demanded increases from point 1 to point 5
• B) quantity demanded increases from point 5 to point 1
• C) quantity demanded decreases from point 1 to point 5
• D) quantity demanded decreases from point 5 to point 1

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Definitions:

Investors

People or organizations that invest money hoping to gain financial profits.

Creditors

Individuals or entities that a company owes money to due to past transactions, such as suppliers, banks, or bondholders.

Investing Activity

Transactions involving the purchase and sale of long-term assets and other investments, part of a company's cash flow statements.

Land

Land is considered a fixed asset or real property, not depreciable under accounting rules, used by businesses for operations or investment.