Author Question: As the real interest rate rises, the quantity of loanable funds supplied ________ and the quantity ... (Read 206 times)

jon_i · **on:** Jun 29, 2018

As the real interest rate rises, the quantity of loanable funds supplied ________ and the quantity of loanable funds demanded ________.

A) does not change; does not change
B) decreases; decreases
C) increases; decreases
D) increases; increases
E) decreases; increases

Question 2

What is unplanned investment? How does it occur?

What will be an ideal response?

rnehls · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

C

Answer to Question 2

Unplanned investment occurs when inventories grow larger than planned. The difference between the actual change in inventories and the planned change is unplanned investment. Unplanned investment occurs when aggregate planned expenditure is less than real GDP so firms sell less output than they had planned.