If the Real Interest Rate Is Above the Equilibrium Real

question 36

Multiple Choice

If the real interest rate is above the equilibrium real interest rate

• A) lenders will be unable to find borrowers willing to borrow all of the available funds and the real interest rate will fall.
• B) borrowers will be unable to borrow all of the funds they want to borrow and the real interest rate will rise.
• C) lenders will be unable to find borrowers willing to borrow all of the available funds and the real interest rate will rise.
• D) borrowers will be unable to borrow all of the funds they want to borrow and the real interest rate will fall.

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Definitions:

National Debt

The sum total of finances that a nation's government has amassed in debt via various avenues.

Deficit

An economic condition where expenditures exceed revenue, common in government budgets.

Surplus

A situation where the quantity supplied of a good or service exceeds the quantity demanded at the current price.

Deflationary Gap

A situation where total spending (aggregate demand) in an economy is lower than the level required to sustain full employment output, leading to deflation and unemployment.