Figure 26-4

question 40

Multiple Choice

Figure 26-4.On the horizontal axis of the graph,L represents the quantity of loanable funds in billions of dollars.
-Refer to Figure 26-4.Regard the position of the Supply curve as fixed,as on the graph.If the real interest rate is 8 percent,the inflation rate is 3 percent,and the market for loanable funds is in equilibrium,then the position of the demand-for-loanable-funds curve must be

• A) D₁ .
• B) D₂.
• C)between D₁ and D₂.
• D)to the right of D₂.

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Definitions:

Price Level

The comprehensive mean price across all goods and services in the current economy.

Classical Dichotomy

A concept in economics that separates real variables, which are quantities or measures not adjusted for inflation, from nominal variables, which are adjusted for inflation.

Real GDP

A measure of the value of all goods and services produced within a country over a specific time period, adjusted for inflation.

Nominal Wage

The wage paid to employees in current dollars, without adjustment for inflation, reflecting the actual amount of money received.