The Real Interest Rate Is ________ Related to the Supply

question 167

Multiple Choice

The real interest rate is ________ related to the supply of loanable funds because ________.

• A) positively; the opportunity cost of consumption expenditure increases as the real interest rate rises.
• B) negatively; the opportunity cost of consumption expenditure increases as the real interest rate rises.
• C) positively; people are motivated to increase their consumption expenditure as the real interest rate rises.
• D) negatively; people are motivated to save more as the real interest rate rises.
• E) None of the above answers are correct.