If the Real Interest Rate Is Less Than the Equilibrium

question 19

Multiple Choice

If the real interest rate is less than the equilibrium real interest rate,there is a ________ of loanable funds,and ________.

• A)shortage;some borrowers cannot find the funds they want
• B)surplus;borrowers have an easy time finding the funds they want
• C)surplus;some borrowers cannot find the funds they want
• D)shortage;savers increase their saving supply to restore the equilibrium
• E)shortage;borrowers have an easy time finding the funds they want

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Definitions:

T-Bill Rate

The yield or interest rate paid to investors in U.S. Treasury bills, which are short-term government securities.

Call Option

A financial agreement allowing the purchaser the option, rather than the requirement, to purchase a given stock, bond, commodity, or different asset at an agreed-upon price within a certain timeframe.

Value Increase

Refers to the rise in worth or price of assets, investments, or goods over time.

Black-Scholes

A mathematical model of a financial market containing derivative investment instruments, primarily used for pricing European call and put options.