Interest Rates Are Determined by the

question 11

Multiple Choice

Interest rates are determined by the

• A)rental rate of capital.
• B)marginal revenue product of physical capital.
• C)market supply and demand for loanable funds.
• D)physical depreciation of capital.

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Definitions:

Increasing Opportunity Costs

The principle that the more a society tries to produce of a specific good, the higher the opportunity cost of further increasing its production.

Production Possibilities Curves

A curve depicting all maximum output possibilities for two goods, given a set of inputs, highlighting the trade-offs in production choices.

Domestic Supply Curves

Graphical representations of the relationship between the price of a good or service and the quantity of that good or service supplied domestically.

Domestic Demand Curves

Graphical representations showing the quantity of a particular good or service that consumers in a domestic market are willing and able to purchase at various prices.