Figure 8-4

question 162

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. If the equilibrium quantity of loanable funds is $56 billion and if the rate of inflation is 5 percent, then the equilibrium nominal interest rate is

• A) lower than 6 percent..
• B) approximately 6 percent.
• C) between 6 percent and 8 percent.
• D) approximately 12 percent.

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Definitions:

Slate

A compact, fine-grained, low-grade metamorphic rock that possesses slaty cleavage.

Hornfels

Hornfels is a metamorphic rock formed by the contact between mudstone or other clay-rich rock and a hot igneous body, characterized by its hardness and fine grain.

Greenstone

Metamorphosed basalt or other mafic volcanic rock, typically found in ancient geological formations.

Banded Gneiss

A metamorphic rock characterized by alternating light and dark mineral bands, formed under high-temperature and high-pressure conditions.