Which of the Following Best Describes the Effects of an Increase

question 92

Multiple Choice

Which of the following best describes the effects of an increase in the real interest rate?

• A)It discourages people from saving and so increases the quantity of loanable funds demanded.
• B)It discourages people from saving and so decreases the quantity of loanable funds demanded.
• C)It encourages people to save and so increases the quantity of loanable funds supplied.
• D)It encourages people to save and so decreases the quantity of loanable funds supplied.

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Definitions:

Factory Machinery

Refers to the equipment and machines used in manufacturing processes within a factory setting.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.

Period Costs

Expenses that are not directly tied to production activities and are expensed in the period in which they are incurred.

Product Costs

Expenses directly tied to the production of goods or services, including raw materials and labor.