If Interest Rates Can Provide an Incentive Not to Spend

question 286

Multiple Choice

If interest rates can provide an incentive not to spend money today, then, as interest rates fall:

• A) there is a movement upward along the supply curve for loanable funds.
• B) the supply curve for loanable funds shifts to the left.
• C) there is a movement downward along the supply curve for loanable funds.
• D) the supply curve for loanable funds shifts to the right.

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Definitions:

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, due to market price.

Price Floor

A government or regulatory-imposed minimum price for a particular good or service, above the equilibrium price.

Government Purchases

Expenditures by government entities on goods and services that are part of government consumption or investment.

Producer Surplus

The difference between the amount producers receive from selling a good or service and the minimum amount they would accept for that good or service.