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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