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Salsk061 [2.6K]
3 years ago
10

If there is a surplus in the market for loanable funds, the resulting change in the real interest rate a. raises the quantity of

loanable funds supplied and reduces the quantity of loanable funds demanded. b. reduces the quantity of loanable funds supplied and raises the quantity of loanable funds demanded c. raises both the quantity of loanable funds supplied and the quantity of loanable funds demanded. d. reduces both the quantity of loanable funds supplied and the quantity of loanable funds demanded.
Business
1 answer:
Arlecino [84]3 years ago
7 0

Answer:

The correct answer is option b.

Explanation:

A surplus in the market for loanable funds is likely to cause a fall in the interest rate. At lower interest rate, people who need credit will demand more loanable funds. While the suppliers will provide less funds. So, the demand of loanable funds will increase and the supply will decrease.

This process will continue till excess demand will cause the interest rate to rise. The initial equilibrium will be restored eventually.

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How long would it take for the price level to double if inflation persisted at the following percentages?
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Answer:

inflation rate = 17.5 percent per year  ⇒ it will take 4 years to double

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we can use the rule of 70 to determine the amount of time it would take the general price level to double.

the rule of 70 is a simple way we can use to estimate the number of years it will take an investment to double given a certain growth rate.

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70 / 35 =  2 years

70 /  3.5 = 20 years  

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