Which Statement Best Predicts the Effects of an Increase in the Supply

question 39

Multiple Choice

Which statement best predicts the effects of an increase in the supply of loanable funds?

• A) The interest rate and the real exchange rate both increase.
• B) The interest rate and the real exchange rate both decrease.
• C) The interest rate increases, and the real exchange rate decreases.
• D) The interest rate decreases, and the real exchange rate increases.

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Definitions:

Alpha

In statistics, it represents the level of significance, marking the threshold for rejecting the null hypothesis; in finance, it denotes the active return on an investment compared to a benchmark index.

Power of the Test

The power of the test refers to the probability that the test correctly rejects a false null hypothesis, effectively detecting an actual effect when it exists.

Unemployment Rate

The rate of individuals in the workforce who are not employed but are seeking a job.

Random Sample

A sample in which each member of a population has an equal chance of being selected, ensuring the representativeness of the sample.