Figure 8-4

question 153

Multiple Choice

Figure 8-4. On the horizontal axis of the graph, L represents the quantity of loanable funds in billions of dollars.

-Refer to Figure 8-4. 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 D₁and D₂.
• D) to the right of D₂.

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Definitions:

Tariff

A tax imposed on imported goods and services to regulate trade, increase government revenue, or protect domestic industries.

Consumer Surplus

The variance between the sum consumers are inclined and can afford to pay for a good or service and the sum they genuinely pay.

Producer Surplus

Producer surplus is the difference between what producers are willing to sell a good for and the actual price they receive.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total benefits to society from the trading of goods or services.