Suppose the Current Real Interest Rate Is 4 Percent and the Equilibrium

question 80

Multiple Choice

Suppose the current real interest rate is 4 percent and the equilibrium real interest rate is 3 percent. Then

• A) prices rise and inflation occurs.
• B) there is a surplus of loanable funds.
• C) there is a shortage of loanable funds.
• D) there is neither a shortage nor surplus of loanable funds.

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