In the graph you've just made, what happens if the real interest rate is 4 percent per year? A. The real interest rate rises to 8 percent per year, where there is a surplus of loanable funds. B. The real interest rate fluctuates between 4 and 8 percent per year. C. The real interest rate remains at 4 percent per year. D. There is a shortage of loanable funds and the real interest rate rises to 6 percent per year.
In the graph you've just made, what happens if the real interest rate is 4 percent per year? A. The real interest rate rises to 8 percent per year, where there is a surplus of loanable funds. B. The real interest rate fluctuates between 4 and 8 percent per year. C. The real interest rate remains at 4 percent per year. D. There is a shortage of loanable funds and the real interest rate rises to 6 percent per year.
Chapter16: The Markets For Labor, Capital, And Land
Section: Chapter Questions
Problem 12P
Related questions
Question
In the graph you've just made, what happens if the real interest rate is 4 percent per year?
A. The real interest rate rises to 8 percent per year, where there is a surplus of loanable funds.
B. The real interest rate fluctuates between 4 and 8 percent per year.
C. The real interest rate remains at 4 percent per year.
D. There is a shortage of loanable funds and the real interest rate rises to 6 percent per year.
Use screenshot attached below to answer the question thanks!
![At real interest rates
below 6 percent a year,
the quantity of loanable
funds demanded exceeds
the quantity supplied and
the real interest rate rises.
Regardless of whether
there is a surplus or a
shortage of loanable funds,
the real interest rate
changes and is pulled
toward an equilibrium level.
Ⓒ
Reset
Real interest rate (percent per year)
12
10
8
6
4
2
10
Surplus of
funds-real
interest rate
falls
Shortage of
funds-real
interest rate
rises
15
20
Equilibrium
25
3.0
SLF
DLF
1
3.5](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6333ddc4-759c-4902-9fe8-82f0432d196a%2F43700714-640b-4edf-954c-4292402440e7%2Fk7brox_processed.png&w=3840&q=75)
Transcribed Image Text:At real interest rates
below 6 percent a year,
the quantity of loanable
funds demanded exceeds
the quantity supplied and
the real interest rate rises.
Regardless of whether
there is a surplus or a
shortage of loanable funds,
the real interest rate
changes and is pulled
toward an equilibrium level.
Ⓒ
Reset
Real interest rate (percent per year)
12
10
8
6
4
2
10
Surplus of
funds-real
interest rate
falls
Shortage of
funds-real
interest rate
rises
15
20
Equilibrium
25
3.0
SLF
DLF
1
3.5
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