Which of the following statements is correct?
A)The interest rate that is usually reported is the interest rate that has been corrected for inflation.
B)The supply of,and demand for,loanable funds depend on the real (rather than nominal)interest rate.
C)If the nominal interest rate has decreased and the real interest rate has also decreased,then the inflation rate must have decreased as well.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

The supply of and demand for loanable funds depend on the real interest rate because it takes inflation into account. Option A is incorrect because the interest rate reported is usually the nominal interest rate, which is not corrected for inflation. Option C is incorrect because a decrease in both nominal and real interest rates can occur due to changes in supply and demand for loanable funds, without any changes in inflation.

Which of the Following Statements Is Correct