Figure 18-4

question 178

Multiple Choice

Figure 18-4.On the horizontal axis of the graph,L represents the quantity of loanable funds in billions of dollars.
-Refer to Figure 18-4.If the equilibrium quantity of loanable funds is $56 billion and if the rate of inflation is 4 percent,then the equilibrium real interest rate is

• A) lower than 6 percent..
• B) 6 percent.
• C) between 6 percent and 8 percent.
• D) higher than 8 percent.

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Definitions:

Bonds Payable

A financial liability representing the amount a company owes to holders of its issued bonds, typically repayable at a future date.

Cash Dividends

A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders in the form of cash.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

Operating Activities

Transactions related to the primary business operations, like selling goods or services and other core business activities, reflected in the company's cash flow.