If the Real Interest Rate Is Less Than the Equilibrium

question 179

Multiple Choice

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

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

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Definitions:

Increases

A term denoting a rise or growth in quantity, size, intensity, or level of something.

Industrial Policy

Governmental strategies aimed at encouraging development and growth in the industrial sector of an economy through a mix of policies including subsidies, tax incentives, and investments in infrastructure and innovation.

Government Policy

The set of laws and regulations enacted by government officials that affect the operations of a country or region.

Competitiveness

The ability of a company, sector, or country to produce goods or services that meet the test of international markets while maintaining or increasing the real incomes of its citizens.