If There Is Surplus of Loanable Funds, Which of the Following

question 3

Multiple Choice

If there is surplus of loanable funds, which of the following is most likely to happen?

• A)The supply for loanable funds shifts right and the demand shifts left.
• B)The supply for loanable funds shifts left and the demand shifts right.
• C)Neither curve shifts, but the quantity of loanable funds supplied increases and the quantity demanded decreases as the interest rate rises to equilibrium.
• D)Neither curve shifts, but the quantity of loanable funds supplied decreases and the quantity demanded increases as the interest rate falls to equilibrium.

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Definitions:

Common Share Price

The market value of a single share of a company's common stock.

Debt

An amount of money borrowed by one party from another, under the condition that it is to be paid back at a later date, usually with interest.

Equity

The value of an ownership interest in property, including shareholders' ownership in a corporation.

EPS

Earnings Per Share, a financial ratio that measures the amount of net income earned per share of stock outstanding.