An Increase in the Real Interest Rate Results in a

question 65

Multiple Choice

An increase in the real interest rate results in a

• A) rightward shift in the supply of loanable funds curve.
• B) leftward shift in the supply of loanable funds curve.
• C) movement along the supply of loanable funds curve.
• D) none of the above.

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Definitions:

Strike Price

The predetermined price at which an option's holder has the right to purchase (for a call option) or sell (for a put option) the underlying asset.

Option

An option is a financial derivative that gives the holder the right, but not the obligation, to buy or sell an asset at a predetermined price within a specified timeframe.

European Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy a certain asset at a specified price (strike price) on a specified date.

Strike Price

The specified price at which the holder of a financial option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.