-The Above Table Has the Private Demand for Loanable Funds

question 168

Multiple Choice

$$\begin{array} { c c c } \begin{array} { c } \text { Real interest rate } \\\text { (percent per year) }\end{array} & \begin{array} { c } \text { Demand for loanable funds Supply of loanable funds } \\\text { (billions of } \\\text { 2005 dollars) }\end{array} & \begin{array} { c } \text { (billions of } \\\text { 2005 dollars) }\end{array} \\\hline 3 & 750 & 450 \\4 & 700 & 500 \\5 & 650 & 550 \\6 & 600 & 600 \\7 & 550 & 650 \\8 & 500 & 700 \\9 & 450 & 750\end{array}$$
-The above table has the private demand for loanable funds and the private supply of loanable funds schedules.If the government budget deficit is $200 billion, and there is no Ricardo-Barro effect, the equilibrium real interest rate is ________ and the equilibrium quantity of investment is ________.

• A) 6 percent; $600 billion
• B) 4 percent; $700 billion
• C) 8 percent, $500 billion
• D) 8 percent; $700 billion
• E) 4 percent; $500 billion

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Definitions:

Ridge

A long, narrow elevated landform often formed by the uplift of the surrounding area or by tectonic activities.

Plucking

A glacial process where rocks and other materials are pulled away from the earth and incorporated into the moving glacier, mainly due to the freezing of water into cracks.

Abrasion

The mechanical scraping of a rock surface by friction between rocks and moving particles during their transport by wind, glacier, waves, gravity, or running water.

Snowflakes

Ice crystals that form in clouds when water vapor freezes, creating unique patterns that fall to the ground as snow.