The quantity of loanable funds supplied increases if the ________, all other things remaining the same, because the ________
A) real interest rate falls; real interest rate is the opportunity cost of consumption
B) real interest rate rises; real interest rate is the opportunity cost of saving
C) real interest rate falls; real interest rate is the opportunity cost of saving
D) real interest rate rises; cost of living is determined by the real interest rate
E) real interest rate rises; real interest rate is the opportunity cost of consumption
E
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If the economy suffers a permanent negative supply shock because there is an increase in regulations that permanently reduce the level of potential output, then
A) potential output falls. B) the long-run aggregate supply curve shifts leftward. C) the short-run aggregate supply curve shifts upward. D) all of the above.
Refer to the above figures. A unit tax of $2 has been levied on a good. Which of the panels depict the effect of the taxes?
A) Panel 1 B) Panel 2 C) Panel 3 D) None of the diagrams reflect the effect of the tax.