Suppose That a Severe Shock That Decreases the Demand for Loanable

question 71

Multiple Choice

Suppose that a severe shock that decreases the demand for loanable funds hits Canada. Which of the following can we expect to occur according to real business cycle theory?

• A)The real interest rate will fall.
• B)People will work fewer hours.
• C)The real wage rate will fall.
• D)The demand for loanable funds will decrease.
• E)All of the above are true.

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Definitions:

Conditions Of Scarcity

A situation where the demand for a resource significantly exceeds its available supply, leading to allocation challenges.

Economics

The social science that studies how goods and services are produced, distributed, and consumed, and how individuals, businesses, and governments make choices given limited resources.

Institutions

Structures or mechanisms of social order governing the behavior of a set of individuals within a given community, including laws, norms, and organizations.

Society

An organized group of individuals living together in a structured community with shared laws, traditions, and values.