Use the Following to Answer Questions

question 123

Multiple Choice

Use the following to answer questions
Figure: Market for Loanable Funds

-(Figure: Market for Loanable Funds) If the interest rate is 5% in this market for loanable funds,then:

• A) savings exceeds investment by $200 million.
• B) savings exceeds investment by $100 million.
• C) savings exceeds borrowing demands by $200 million.
• D) savings exceeds borrowing demands by $100 million.

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Definitions:

Inflation Rate

Inflation rate measures the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Exchange Rate Risk

The fluctuation in exchange rates between currencies over time.

Foreign Project

An investment or business venture situated outside of the investor's home country, often requiring analysis of country-specific risks and rewards.

Cross Exchange Rate

The exchange rate between two currencies, derived from their respective exchange rates with a third common currency.