Multiple Choice
The market for capital is in equilibrium at an interest rate of 3% and a quantity of $10 million. Suppose that households become more frugal and decide to spend less and save more. This would cause the equilibrium interest rate to ____ and the equilibrium quantity of capital to ____.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Correct Answer:
Verified
Correct Answer:
Verified
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