Which of the Following Is NOT True of the Interest

question 4

Multiple Choice

Which of the following is NOT true of the interest rate channel?

• A) bank loans play no special role.
• B) the Fed changes the real interest rate which affects the components of aggregate expenditures.
• C) borrowers are indifferent as to how and from whom they raise funds.
• D) alternative sources of funds are not substitutes for each other.

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Definitions:

Elasticity of Demand

A measure of how sensitive the quantity demanded of a good is to a change in its price, indicating how consumers' purchasing decisions are affected by price changes.

Natural Gas

A fossil fuel used primarily for heating, electricity generation, and as a fuel for vehicles, consisting mainly of methane and found underground.

Price Increase

A rise in the cost of goods or services over a specific period of time, which can affect purchasing power and economic stability.

Substitutes

Substitutes are goods or services that can be used in place of each other, fulfilling the same needs or desires of the consumer.