When the Real Interest Rate Rises

question 188

Multiple Choice

When the real interest rate rises

• A) there is a downward movement along the demand for loanable funds curve.
• B) there is an upward movement along the demand for loanable funds curve.
• C) the demand for loanable funds curve shifts rightward.
• D) the demand for loanable funds curve shifts leftward.

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Definitions:

Discount Rate

In the realm of discounted cash flow analysis, this interest rate is used to calculate the present value of expected future cash flows.

Payments

The process of transferring money in exchange for goods or services or as fulfillment of obligations.

Years

A unit of time equal to 365 days (or 366 in a leap year), used to measure duration or age.

Compounded Monthly

The process where interest earned on a loan or investment is calculated and added to the principal amount each month, facilitating growth in the investment or debt.