If the Real Interest Rate Is Below the Equilibrium Real

question 59

Multiple Choice

If the real interest rate is below the equilibrium real interest rate,

• A)lenders will be unable to find borrowers willing to borrow all of the available funds and the supply of loanable funds curve shifts leftward.
• B)borrowers will be unable to borrow all of the funds they want to borrow and the demand for loanable funds curve shifts rightward.
• C)a shortage of of loanable funds exists, and the real interest rate rises.
• D)borrowers will be unable to borrow all of the funds they want to borrow and the demand for loanable funds curve shifts leftward.
• E)lenders will be unable to find borrowers willing to borrow all of the available funds and the supply of loanable funds curve shifts rightward.

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Definitions:

Inelastic Supply

Describes a situation where the quantity supplied of a good changes by a smaller percentage than the percentage change in its price.

Excise Tax

A tax levied on specific goods, services, or transactions, often to discourage consumption or generate revenue for public purposes.

Cigarette Manufacturers

Companies engaged in the production and sale of cigarettes.

Burden

Often used in the context of taxation or regulations, indicating the weight of responsibility or negative impacts placed on individuals or organizations.