What is TRUE when the credit market is in equilibrium?
A) Desired saving equals desired investment.
B) Desired employment equals the number of jobs available.
C) Desired consumption spending equals the total of saving plus investment.
D) The legal minimum wage equals the actual wage.

Question

Quizplus · Accepted Answer

In an equilibrium credit market, desired saving equals desired investment. This means that borrowers are willing to borrow and lenders are willing to lend at the prevailing interest rate, resulting in a balance between saving and investment in the economy. Choice B is incorrect because the credit market equilibrium does not necessarily depend on employment or the number of jobs available. Choice C is incorrect because consumption spending is not directly related to the credit market equilibrium. Choice D is incorrect because the legal minimum wage is not relevant to the credit market equilibrium.

What Is TRUE When the Credit Market Is in Equilibrium