Suppose the Real Interest Rate Rises and the Quantity of Loanable

question 199

Multiple Choice

Suppose the real interest rate rises and the quantity of loanable funds increases. These changes could have been the result of

• A) firms expecting higher future profits.
• B) firms expecting lower future profits.
• C) households expecting higher future income.
• D) in increase in the default risk.

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Definitions:

Utility Maximization

The economic principle that individuals or firms strive to get the greatest satisfaction or benefit from their available resources.

Marginal Utility

The enhanced gratification or value a customer derives from consuming another unit of a good or service.

Utility Equilibrium

A state in consumer theory where a consumer efficiently allocates their income to maximize their total utility.

Marginal Utility Data

Marginal utility data refers to information that describes the change in utility or satisfaction a consumer derives from consuming one additional unit of a good or service.