Suppose the Current Real Interest Rate Is 4 Percent and the Equilibrium

question 60

Multiple Choice

Suppose the current real interest rate is 4 percent and the equilibrium real interest rate is 3 percent. Choose the correct statement.

• A)The supply of loanable funds increases.
• B)There is a surplus of loanable funds.
• C)There is a shortage of loanable funds.
• D)There is neither a shortage nor surplus of loanable funds.
• E)The demand for loanable funds decreases.

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Definitions:

Economic Profit

The profit margin calculated by taking a company's total earnings and subtracting all costs, overt and covert.

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A market structure characterized by a single seller who has exclusive control over a product or service, leading to limited competition.

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