If the Real Interest Rate Rises from 3 Percent to 5

question 49

Multiple Choice

If the real interest rate rises from 3 percent to 5 percent,

• A)the nominal interest rate falls.
• B)the demand for loanable funds curve shifts rightward.
• C)there is a movement up along the demand for loanable funds curve.
• D)the supply of loanable funds curve shifts rightward.
• E)there is a movement down along the supply of loanable funds curve.

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Definitions:

Redeemable Bonds

Bonds that can be returned to the issuing entity before maturity for a predetermined price.

Retirement

The act of withdrawing from one's position or occupation, or the period of life after ending one's career, often implying financial self-sufficiency.

Stated Dollar Amount

A specified amount of money expressed in dollars, often referring to the face value of financial instruments or the nominal amount in transactions.

Credit Ratings

Assessments of the creditworthiness of borrowers, ranging from governments to private enterprises, indicating their ability to repay borrowed money.