The Quantity of Loanable Funds Supplied Increases If the Real

question 79

Multiple Choice

The quantity of loanable funds supplied increases if the real interest rate rises, all other things remaining the same, because the

• A) real interest rate is the opportunity cost of saving.
• B) real interest rate is the opportunity cost of consumption.
• C) demand for investment increases when the real interest rate rises.
• D) cost of living is determined by the real interest rate.
• E) real interest rate is inversely related to the cost of buying on credit.

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Definitions:

Ordinary Annuity

A sequence of identical payments that are distributed at consistent intervals, where the initial payment is made at the conclusion of the period.

RRSP

Registered Retirement Savings Plan, a retirement savings and investment account for holding savings and investment assets, recognized by the Canadian government.

Month-end Contributions

Payments or deposits made towards an investment or savings plan at the end of each month.

Compounded Monthly

Interest that is calculated and added to the principal balance once a month.