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:

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