Refer to Figure 5.1 for the Following Questions

question 2

Multiple Choice

Refer to Figure 5.1 for the following questions.
Figure 5.1

-Refer to Figure 5.1. Beginning at equilibrium, if the government budget deficit rises, which of the following would you expect to see?

• A)The quantity of loanable funds demanded by firms will rise above $120 million.
• B)The quantity of loanable funds demanded by firms will fall below $120 million.
• C)The budget deficit will have no impact on the quantity of loanable funds demanded by firms.
• D)The interest rate will fall below 4%.

---

Definitions:

Oligopolistic Situation

A market condition where a few companies have the majority of market share and control over pricing.

Barriers to Entry

Factors that make it difficult for new firms to enter a market, often leading to reduced competition.

Dominant Strategies

Strategies in game theory that are preferable regardless of the opponent's actions, leading to a stable solution.

Prisoners' Dilemma Situations

A scenario in game theory where individuals acting in their own self-interest produce a worse outcome for the group than if they had cooperated.