Question

Suppose that there is an increase in expected future disposable income and simultaneously an increase in the expected profitability of investment. As a result, the equilibrium real interest rate ________ and the equilibrium quantity of loanable funds ________.
A) rises; might increase, decrease, or not change
B) rises; increases
C) rises; decreases
D) falls; might increase, decrease, or not change
E) falls; increases

Answer

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