Which of the Following Events Would Most Likely Cause the Nominal

question 37

Multiple Choice

Which of the following events would most likely cause the nominal interest rate to fall?

• A)The supply of loanable funds decreases.
• B)Both the supply of and the demand for loanable funds increase.
• C)Both the supply of and the demand for loanable funds decrease.
• D)The supply of loanable funds increases and the demand for loanable funds decreases.
• E)The supply of loanable funds decreases and the demand for loanable funds increases.

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Definitions:

Availability Heuristic

A cognitive shortcut that depends on the first examples that spring to mind when considering a particular subject, idea, approach, or choice.

Confirmation Bias

The disposition to seek, grasp, esteem, and recount information that confirms existing preconceptions or theories.

Belief Perseverance

The phenomenon where people hold onto their beliefs even when faced with evidence that contradicts or disproves them.

Heuristics

Mental shortcuts or rules of thumb that simplify decision making by reducing complex problem solving to simpler judgment processes.