An increase in the demand for loanable funds will occur if there is
A) an increase in the real interest rate.
B) a decrease in the real interest rate.
C) an increase in expected profits from firm investment projects.
D) an increase in the nominal interest rate accompanied by an equal increase in inflation.
Answer: C
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The economist A.W. Phillips published a famous article in 1958 in which he showed a
a. negative correlation between the rate of unemployment and the rate of inflation. b. positive correlation between the rate of unemployment and the rate of inflation. c. negative correlation between the rate of unemployment and the rate of interest. d. positive correlation between the rate of unemployment and the rate of interest
Suppose a firm can estimate its demand with 100 percent accuracy. In this case, the value of the forecast is equal to ________.
A) zero B) the actual profit the firm earns from having the forecast C) the amount of profit the firm would lose from not having the forecast D) infinity