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1 FINANCE MCQS

An increase in the equilibrium interest rate with the supply curve of funds shifting left or upward is caused by ____________?

  • Increase in future value
  • Decrease in future value
  • Increase in total wealth
  • Decrease in total wealth
Correct Answer: D. Decrease in total wealth

Detailed Explanation

When total wealth decreases, the supply of funds available for lending reduces, shifting the supply curve leftward or upward. With fewer funds available, borrowing becomes more expensive, causing the equilibrium interest rate in the financial market to rise.

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