The interest rate equilibrium is increased and the supply curve of funds shifts to the left or upward is the result of ____________?
Correct answer: D. decrease in total wealthInvesting
- A. increase in future value
- B. decrease in future value
- C. increase in total wealth
- D. decrease in total wealthInvesting
Explanation
A decrease in total wealth tends to reduce saving and the supply of loanable funds, shifting the supply curve leftward or upward. The resulting shortage of funds raises the equilibrium interest rate.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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