The real interest rate is ________ related to the supply of loanable funds because ________
A) negatively; the opportunity cost of consumption expenditure increases as the real interest rate rises
B) negatively; people are motivated to save more as the real interest rate rises
C) positively; people are motivated to increase their consumption expenditure as the real interest rate rises
D) positively; the opportunity cost of consumption expenditure increases as the real interest rate rises
E) None of the above answers is correct.
D
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The interest rate that the Fed charges banks to borrow funds from the Fed is the
A) nominal interest rate. B) discount rate. C) federal funds rate. D) money market rate.
Which of the following statements regarding comparisons of productivity across two firms is true?
A. The firm with the higher APL is the more productive firm. B. The firm with the higher MPL is the more productive firm. C. The firm with the lower MPL is the more productive firm. D. The average product of labor can vary with the choice of inputs and the level of outputs, so the firm with the higher APL may not be the most productive.
The nation of Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. We can conclude that Aquilonia's new free-trade policy has
a. increased consumer surplus and producer surplus in the incense market. b. increased consumer surplus in the steel market and left producer surplus in the rug market unchanged. c. decreased consumer surplus in both the steel and rug markets. d. decreased consumer surplus in the steel market and increased total surplus in the incense market.
Proponents of fixed exchange rates argue that the predictability of the fixed exchange rate:
A. decreases trade and economic integration. B. prevents exchange rate overvaluation. C. increases trade and economic integration. D. allows monetary policy to be used to stabilize the domestic economy.