An Increase in the Demand for Loanable Funds Increases the Equilibrium

question 206

True/False

An increase in the demand for loanable funds increases the equilibrium interest rate and increases the equilibrium level of saving.

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Definitions:

Rate of Return on Investment

A measure of the profitability and efficiency of an investment, calculated by dividing the investment's gain by its cost.

Owners' Equity

refers to the owner's interest in the assets of a business after all liabilities have been deducted.

Net Income

The profit remaining after all expenses, taxes, and costs have been subtracted from total revenue.

Working Capital Ratio

A financial metric used to determine a company's ability to pay off its current liabilities with its current assets.