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Consider the Market for Loanable Funds in the Long Run

Question 80

Multiple Choice

Consider the market for loanable funds in the long run. The investment demand curve is downward sloping because


A) a decrease in the real interest rate reflects a higher opportunity cost to firms of using loanable funds.
B) all components of desired investment are negatively related to the real interest rate.
C) an increase in the real interest rate leads to an increase in investment demand.
D) an increase in the real interest rate reflects a lower opportunity cost to firms of using loanable funds.
E) all components of desired investment are positively related to the real interest rate.

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