Which of the Following Explains Why the Demand for Loanable

question 16

Multiple Choice

Which of the following explains why the demand for loanable funds is negatively related to the real interest rate?

• A) A lower real interest rate makes more investment projects profitable.
• B) Consumers are willing to spend less and hence save more at higher real interest rates.
• C) Interest rate flexibility in financial markets assures an equilibrium in which saving equals investment.
• D) All of the above are reasons why the demand for loanable funds is negatively related to the real interest rate.

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Definitions:

Expectations For Maturity

Refers to the anticipated behavioral and emotional developmental milestones considered typical at certain ages.

Warmth

A quality of friendliness, kindness, and affection, often perceived in interactions or relationships.

Authoritarian

A leadership or government style characterized by absolute or blind submission to authority, often involving the enforcement of strict obedience to directives without input from those being led.

Unquestioning Obedience

A behavioral condition where an individual follows orders without protest or inquiry of its righteousness.