Figure 21-1 -Refer to Figure 21-1. Which of the Following Is Consistent

question 46

Multiple Choice

Figure 21-1
-Refer to Figure 21-1. Which of the following is consistent with the graph depicted above?

• A) An expected recession decreases the profitability of new investment.
• B) Technological change increases the profitability of new investment.
• C) The government runs a budget surplus.
• D) Households become spendthrifts and begin to save less.

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Definitions:

Loanable Funds

The funds available within an economy for borrowing, influencing interest rates and capital availability.

Interest Rate

Fees assessed by a lending party on a borrowing party for asset usage, expressed in terms of the principal's percentage.

Rule of 70

A rule that estimates the number of years required to double an investment or population at a fixed annual growth rate, by dividing 70 by the percentage growth rate.

Annual Interest

The amount of interest earned or paid over a one-year period on investments, loans, or savings.