-The Above Table Has the Private Demand for Loanable Funds

question 7

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 a Ricardo-Barro effect, the equilibrium real interest rate is ________ and the equilibrium quantity of loanable funds 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:

Accounts Receivable Turnover

A financial metric that measures how often a company collects its average accounts receivable balance in a period.

Accounts Payable Turnover

A financial ratio that measures the rate at which a company pays off its suppliers by dividing total purchases by average accounts payable for the period.

Cash Surplus

A situation where a business or individual's income exceeds its expenditures, resulting in available cash for saving or spending.

Cash Balance

The amount of cash that a company or individual has on hand at any given time.