Multiple Choice
An economic recession would be represented in loanable funds theory as
A) a shift in the demand for loanable funds to the right associated with reduced business investment demand and a decline in interest rates.
B) a shift in the demand for loanable funds to the left as real investment weakens, a shift to the right of the supply of loanable funds as the Fed expands the money supply, and a decrease in interest rates.
C) a movement along the demand for loanable funds as interest rates decline.
D) an increase in the supply of loanable funds as the level of savings increases accompanied with an increase in the demand for loanable funds as housing investment is increased, and a decrease in interest rates.
Correct Answer:
Verified
Correct Answer:
Verified
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