If Foreign Entities Save More and Businesses Become More Optimistic

question 126

Multiple Choice

If foreign entities save more and businesses become more optimistic about the future,we would correctly say that

• A) the new equilibrium quantity of loanable funds would decrease,but we would be unable to tell if the new equilibrium interest rate would be higher or lower than the original.
• B) the new equilibrium quantity of loanable funds would increase,but we would be unable to tell if the new equilibrium interest rate would be higher or lower than the original.
• C) the new equilibrium quantity of loanable funds would be indeterminate,but we would be certain the new equilibrium interest rate would be higher than the original.
• D) the new equilibrium quantity of loanable funds would be indeterminate,but we would be certain the new equilibrium interest rate would be less than the original.
• E) based on this information and because both changes would affect the demand for loanable funds in the opposite way,we would be unable to say anything about the relationship of the new equilibrium interest rate and quantity to the original interest rate and quantity.

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Definitions:

Standard Cost

A predetermined cost of manufacturing a single unit or a specified quantity of a particular product or service, used as a benchmark to measure performance.

Direct Material

Raw materials that are directly attributable to the product being manufactured and can be easily traced in the manufacturing process.

Output

In economic and production contexts, this refers to the total amount of goods or services produced by a company or economy.

Actual Cost

The true expenditure incurred for manufacturing, operations, or project activities.