The Following Table Lists Some Economic Agents and Their Intentions

question 26

Multiple Choice

The following table lists some economic agents and their intentions. At present the interest rate is 5 percent.

-Refer to the table above.Assume that Peter,who needs a loan of $10,000 to repair his business,enters the loanable funds market.Inflation is 3 percent.Which answer below could describe the new equilibrium?

• A) Q* = $110,000, r = 4.5 percent
• B) Q* = $120,000, r = 3 percent
• C) Q* = $140,000, r = 5 percent
• D) Q* = $160,000, r = 3 percent

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Definitions:

Public Assistance

Government programs designed to provide financial aid to individuals and families in need to support their basic life necessities.

Welfare Payments

Government-provided financial assistance to individuals or families in need, aimed at supporting their basic living expenses.

Relative Concept

An idea or principle that is understood in relation to something else or varies according to context.

Welfare Benefit Levels

The amount of financial aid provided by government programs to support individuals and families in need.