If There Is a Surplus of Loanable Funds, the Quantity

question 24

Multiple Choice

If there is a surplus of loanable funds, the quantity demanded is

• A)greater than the quantity supplied and the interest rate will rise.
• B)greater than the quantity supplied and the interest rate will fall.
• C)less than the quantity supplied and the interest rate will rise.
• D)less than the quantity supplied and the interest rate will fall.

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Definitions:

Cost Behaviour

The way in which a cost changes in relation to changes in business activity levels.

Direct Material Costs

The expenses for raw materials that are directly traceable to the manufacturing of a specific product.

Units Produced

The total number of complete units manufactured or finished in a given period.

Fixed Costs Per Unit

Fixed costs per unit decrease as production volume increases, reflecting the spread of costs that do not change with the level of output over a larger number of units.