The demand for loanable funds curve slopes downward because the
A) expected rate of profit is related positively to the real interest rate.
B) real interest rate is the opportunity cost of investment.
C) price of bonds and stocks is not related to the real interest rate.
D) higher the real interest rate, the lower the cost of investment.
E) expected rate of profit is factor that "rewards" firms for their investment.
B
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Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
One problem with employer mandated health insurance is _____
a. it increases the cost of hiring employees b. it makes it difficult to employ highly-skilled individuals c. it provides universal coverage d. it creates moral hazard
The cost to a member bank of borrowing from the Federal Reserve is called the:
a. reserve requirement. b. price of securities in the open market. c. discount rate. d. yield on government bonds.
An example of an opportunity cost is the time you forgo to eat a "free lunch."
a. True b. False Indicate whether the statement is true or false