Figure 26-4

question 77

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.If the equilibrium quantity of loanable funds is $50 billion and if the equilibrium nominal interest rate is 8 percent,then

• A)there is an excess supply of loanable funds at a real interest rate of 6 percent.
• B)there is an excess demand for loanable funds at a real interest rate of 8 percent.
• C)the rate of inflation is approximately 2 percent.
• D)the rate of inflation is approximately 14 percent.

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Definitions:

Coinsurance Clause

A provision in insurance policies that requires the policyholder to bear a portion of the costs of a claim, with the insurance company paying the remainder.

Coinsurance Clause

A provision in an insurance policy that defines the percentage of the claim amount to be shared between the insurer and the insured.

Short-rate Refund

A return of a portion of the premium on an insurance policy that is canceled by the policyholder before its expiration, calculated at less than a pro-rata basis.

Premium Rate

The cost rate of insurance coverage per unit of coverage, reflecting the risk and administrative costs.