The process by which financial institutions accept savings from businesses, households and governments and lend the savings to other businesses, households and governments is

When total planned real expenditures change due to changes in the cost of borrowing that result from variations in the price level, this is known as the

A) interest rate effect. B) real-balance effect. C) open economy effect. D) aggregate balances effect.

Refer to the graph below. The economy is at point B2, and then aggregate demand increases. In the short run, the economy will:

A. Stay at point B2 and remain there in the long run
B. Move to point C2 and in the long run move on to B3.
C. Move to point B3 and in the long run move on to C2.
D. Move to point B1 and in the long run move back to B2.