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Suppose Firms Become More Optimistic About the Economy's Ability to Avoid

Question 119

Multiple Choice

Suppose firms become more optimistic about the economy's ability to avoid a recession and hence the expected profit increases. As a result, the demand for loanable funds curve shifts --------------------and the real interest rate --------------------.


A) leftward; falls
B) rightward; falls
C) leftward; rises
D) rightward; does not change
E) rightward; rises

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