Asked by Megan Chung on May 28, 2024
Verified
The equilibrium interest rate equates
A) nominal and real interest rates.
B) the quantities demanded and supplied of loanable funds.
C) consumption and saving.
D) taxes and government spending.
Equilibrium Interest
The interest rate at which the demand for funds equals the supply of funds, balancing savings and investment in the economy.
Loanable Funds
Funds available for borrowing, influenced by savings and investments, which affect interest rates and economic activity.
- Recognize the role of the equilibrium interest rate in balancing the supply and demand of loanable funds.
Verified Answer
BG
Britni GurganusMay 28, 2024
Final Answer :
B
Explanation :
The equilibrium interest rate is the rate at which the quantity of loanable funds demanded equals the quantity supplied, balancing the desires of savers and borrowers in the financial markets.
Learning Objectives
- Recognize the role of the equilibrium interest rate in balancing the supply and demand of loanable funds.
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