Which of the Following Explains Why the Demand for Loanable

question 16

Multiple Choice

Which of the following explains why the demand for loanable funds is negatively related to the real interest rate?

• A) A lower real interest rate makes more investment projects profitable.
• B) Consumers are willing to spend less and hence save more at higher real interest rates.
• C) Interest rate flexibility in financial markets assures an equilibrium in which saving equals investment.
• D) All of the above are reasons why the demand for loanable funds is negatively related to the real interest rate.

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Definitions:

Executive Order 8802

Executive Order 8802 was issued by President Franklin D. Roosevelt in 1941 to prohibit racial discrimination in the national defense industry.

Employment Discrimination

Unfair treatment of employees or job applicants based on race, gender, age, religion, national origin, disability, or other protected characteristics rather than job performance or qualifications.

Defense Industries

Sector of the economy dedicated to producing weapons, military technology, and supplies for armed forces.

Brigadier General

A military rank that is above a Colonel and below a Major General in the armies of various countries.