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Use the following to answer questions: Use the following to answer questions:   -(Figure: Loanable Funds)  Use Figure: Loanable Funds. Which scenario might produce a new equilibrium interest rate of 4% and a new equilibrium quantity of loanable funds of $75 billion? A)  Profit expectations for business investments become less optimistic. B)  Capital inflows from foreign citizens decline. C)  The federal government runs a budget deficit, rather than a surplus. D)  The government eliminates taxes on income from interest earned.
-(Figure: Loanable Funds) Use Figure: Loanable Funds. Which scenario might produce a new equilibrium interest rate of 4% and a new equilibrium quantity of loanable funds of $75 billion?

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Definitions:

Forward Buy

A purchasing strategy where a buyer purchases larger quantities of goods in advance to take advantage of lower prices or to hedge against future price increases.

Profitability

The ability of a business to generate more revenue than the expenses incurred, resulting in a profit.

Manufacturing Capacity

The maximum amount of products a factory or production facility can produce within a given time period.

Inventory Costs

Expenses associated with holding and managing goods or materials until they are sold or used in production.

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