What Is the Effect of a Decrease in Expected Profit

question 16

Multiple Choice

What is the effect of a decrease in expected profit?

• A)The demand curve for loanable funds shifts leftward and the real interest rate falls.
• B)The supply curve of loanable funds shifts rightward and the nominal interest rate rises.
• C)A movement down along the demand curve for loanable funds occurs.
• D)The real interest rate rises as saving increases.
• E)The demand curve for loanable funds shifts rightward and the real interest rate rises.

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Definitions:

Equilibrium Price

The cost at which the amount of a product or service that consumers want to buy matches the amount that producers are willing to sell, thereby achieving equilibrium in the market.

Law of Demand

The principle stating that, all else being equal, as the price of a good increases, its demand falls and vice versa.

Market for Pizza

An example of a niche market, focused specifically on the buying and selling of pizza, influenced by consumer preferences and economic factors.

Summer to Fall

The transitional period from the warm summer months to the cooler autumn season, often marked by changes in weather, fashion, and consumer behavior.