An Increase in the Real Interest Rate Results in Which

question 212

Multiple Choice

An increase in the real interest rate results in which of the following?

• A)an increase in the demand for loanable funds
• B)a decrease in the demand for loanable funds
• C)an increase in the quantity of loanable funds supplied
• D)a decrease in the supply of loanable funds
• E)Both B and C will occur as a result of an increase in the real interest rate.

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Definitions:

Marginal Cost

Marginal cost is the cost incurred by producing one additional unit of a product or service, emphasizing the concept of variable costing.

Resource Allocation

The process of allocating resources, including capital, labor, and materials, among competing uses or projects in an efficient manner.

Production Possibilities Curve

The Production Possibilities Curve (PPC) is a model that shows the various combinations of two goods or services that an economy can produce, given its resources and technology, illustrating the concept of opportunity cost.

Unemployment Rate

The percentage of the labor force unemployed at any time.