Figure 66 Alt Text for Figure 6

question 180

Multiple Choice

Figure 6.6 Alt text for Figure 6.6: In figure 6.6, a graph shows loanable funds market in equilibrium.
Long description for Figure 6.6: The x-axis is labelled, quantity of loanable funds (millions of dollars) , ranging from 0 to 180 in increments of 30.The y-axis is labelled real interest rate, ranging from 0 to 6% in increments of 1.2 intersecting lines are shown.A line labelled D begins at the top left corner and slopes down toward the end of the x-axis.Another line labelled S begins near the origin and slopes upward to the top right corner.5 points are plotted on these two lines as (90, 5) , (90, 3) , (120, 4) , (150, 5) , (150, 3) .These points are connected to their respective coordinates on the x-axis and y-axis using dotted lines.
-Refer to Figure 6.6.The loanable funds market is in equilibrium, as shown in the figure above.As a result of an increase in the government budget deficit, the ________ for loanable funds will ________, thereby ________ the equilibrium real interest rate and ________ the equilibrium quantity of loanable funds.

• A)demand; rise; increasing; decreasing
• B)supply; rise; decreasing; increasing
• C)demand; fall; decreasing; decreasing
• D)supply; fall; increasing; decreasing
• E)demand; rise; increasing; increasing

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Definitions:

Rule Of Reason

A doctrine used by courts to analyze the legality of certain business practices based on their economic impact, particularly in antitrust law.

Clayton Act

A U.S. legislation enacted in 1914 aimed at preventing anti-competitive practices in their incipiency, amending and bolstering the Sherman Act against monopolies.

Alcoa

Aluminum Company of America, a major producer and supplier of aluminum and related products, historically significant in the development of the aluminum industry.

Antitrust

Laws and regulations designed to promote competition and prevent monopolies or anti-competitive practices in the marketplace.