Which of the Following Would Necessarily Create a Surplus at the Original

question 75

Multiple Choice

Which of the following would necessarily create a surplus at the original equilibrium interest rate in the loanable funds market?

• A)an increase in the supply of or a decrease in the demand for loanable funds
• B)an increase in the supply of or an increase in the demand for loanable funds
• C)a decrease in the supply of or a decrease in the demand for loanable funds
• D)a decrease in the supply of or an increase in the demand for loanable funds

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Definitions:

Elastic Supply

A scenario in which the amount of a product available for sale markedly changes in response to its price adjustments.

Social Security Tax

A tax levied on both employers and employees to fund the Social Security program, which provides benefits to retirees, disabled workers, and survivors of deceased workers.

Withholding Rate

The percentage of an employee's income that an employer holds back for tax purposes before paying the employee.

Labor Elasticity

The responsiveness of the quantity of labor supplied or demanded to changes in wages or employment conditions.