Use the Following to Answer Questions

question 288

Multiple Choice

Use the following to answer questions:
Figure: Loanable Funds
-(Figure: Loanable Funds) Look at the figure Loanable Funds. Which of the following 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.

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Definitions:

Dividends Declared

Profits that a company's board of directors has decided to distribute to its shareholders, usually in the form of cash payments or additional shares.

Shareholders' Equity

The remaining value of a company's assets after liabilities are subtracted, which signifies the ownership stake of the shareholders.

Debits

An accounting entry that increases an asset or expense account, or decreases a liability or equity account.

Credits

Entries in accounting that increase liabilities or equity or decrease an asset or expense.