Figure 26-4

question 343

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. Which of the following events could explain a shift of the demand-for-loanable-funds curve from D₁ to D₂?

• A) The tax code is reformed to encourage greater saving.
• B) The tax code is reformed to encourage greater investment.
• C) The government starts running a budget deficit.
• D) The government starts running a budget surplus.

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Definitions:

National Exchange

A formal marketplace where securities, commodities, derivatives, and other financial instruments are traded.

CBOE

Chicago Board Options Exchange, the largest options exchange in the world, known for trading options and other securities.

Listed Call Option

An option that gives the holder the right, but not the obligation, to buy a specified amount of an underlying security at a specified price within a specified time period, traded on a formal exchange.

Exercise Price

The cost at which the possessor of an option is able to purchase (in the case of a call option) or dispose of (in the case of a put option) the underlying asset.