If at a Given Real Interest Rate Desired National Saving

question 33

Multiple Choice

If at a given real interest rate desired national saving would be $50 billion,domestic investment would be $40 billion,and net capital outflow would be $20 billion,then at that real interest rate in the loanable funds market there would be a

• A) surplus.The real interest rate would rise.
• B) surplus.The real interest rate would fall.
• C) shortage.The real interest rate would rise.
• D) shortage.The interest rate would fall.

Identify factors affecting the entry and exit of firms in a market.

Distinguish between contestable markets and competitive markets in terms of entry and exit barriers and market outcomes.

Explain how the structure of the market affects firms' pricing strategies and market outcomes.

Understand the characteristics and behaviors of firms in competitive price-searcher markets.

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Definitions:

Rate of Interest

The percentage of the principal charged by the lender for the use of its money.

Compounded Quarterly

Interest calculation method where the interest is added to the principal four times annually, leading to increased growth over time due to the quarterly compounding effect.

Economic Value

The measure of the benefit provided by a good or service to an economic agent.

Bequest

A transfer of personal property or assets to beneficiaries through a will.