As the Real Interest Rate Rises, the Quantity of Loanable

question 1

Multiple Choice

As the real interest rate rises, the quantity of loanable funds supplied ________ and the quantity of loanable funds demanded ________.

• A) increases; increases
• B) increases; decreases
• C) decreases; increases
• D) decreases; decreases
• E) does not change; does not change

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Definitions:

Indifference Curves

Graphs representing different combinations of two goods that provide the same level of utility or satisfaction to a consumer.

Optimal Consumption

The consumption point at which a consumer achieves the highest possible satisfaction from available resources.

Loaves

Units of bread or any baked product that are shaped and sized for slicing, often made from a dough or batter.

Pounds

A unit of weight commonly used in the United States and Britain, equivalent to 0.453592 kilograms.