It Is Argued That One of the Weaknesses of the Loanable

question 91

Multiple Choice

It is argued that one of the weaknesses of the loanable funds approach is that a final equilibrium interest rate cannot be determined.Which of the following statements supports this argument?

• A) An equilibrium interest rate will affect savings at that level, which will affect the loanable funds demand curve.
• B) Dishoarding of loanable funds will continue for successive periods.
• C) In the loanable funds approach, the supply and demand curves are interdependent.
• D) Changes in the money supply in one period need to be matched in ensuing periods.

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