If supply is upward-sloping and demand is downward sloping, what happens to the equilibrium real risk-free interest rate and quantity of real loanable funds per time period if there is an increase in the real saving and a decline in business investment?
a. The real risk-free interest rate falls and the quantity per time period rises.
b. The real risk-free interest rate falls and the quantity per time period is uncertain.
c. The real risk-free interest rate does not change and the quantity per time period rises.
d. The real risk-free interest rate is uncertain and the quantity per time period rises.
e. The real risk-free interest rate is uncertain and the quantity per time period is uncertain.
.B
You might also like to view...
Conditions that likely contributed to a credit crunch during the global financial crisis include
A) capital shortfalls caused in part by falling real estate prices. B) regulated hikes in bank capital requirements. C) falling interest rates that raised interest rate risk, causing banks to choose to hold more capital. D) increases in reserve requirements.
What causes an economy to produce a level of output which lies inside the production set?
When a market is in equilibrium:
a. there is a downward pressure on the price. b. quantity demanded is equal to quantity supplied. c. there is excess supply in the market. d. quantity demanded exceeds quantity supplied.
The international trade bloc that liberalized the movement of capital and labor among its members is the:
A. North American Free Trade Agreement B. North Atlantic Treaty Organization C. European Union D. World Trade Organization